Dr. Johnson Asiama, in his first formal remarks as Bank of Ghana (BoG) Governor, has signalled a shift toward greater transparency in the central bank’s monetary policy decision-making process.
Addressing the Monetary Policy Committee’s (MPC) 123rd meeting as they began deliberations yesterday, Dr. Asiama acknowledged public concerns regarding perceived opacity of the committee’s deliberations and outlined steps to improve communication and credibility.
“There is a growing sense in public commentary that MPC decisions are taken behind closed doors without clear, data-driven reasoning. To counter this, I am proposing that we implement mechanisms to make the Committee’s decision factors more accessible – whether through publishing voting outcomes or enhancing the narrative content of our policy statements,” he explained.
The Governor’s comments come at a time of heightened economic uncertainty with inflation still above 23 percent, well over the central bank’s medium-term target.
Persistent food inflation and a volatile external environment have increased speculation that the MPC may be forced to tighten policy further in the coming months.
Market analysts are increasingly betting on a rate hike at the MPC meetings’ conclusion, with some expecting an increase of up to 100 basis points (bps) when the decision is announced on Friday, March 28, 2025.
While the BoG has not provided explicit guidance on future rate moves, Dr. Asiama acknowledged the delicate balance policymakers must strike. “Our task over the next few days is to weigh these developments rigorously and reach a policy stance that reinforces the disinflation path without undermining the recovery or destabilising market expectations,” he stated.
Improving market confidence through better communication
Beyond monetary tightening, Dr. Asiama’s commitment to greater transparency is seen as a strategic effort to bolster confidence in the BoG’s policy framework.
Analysts and business leaders have long called for clearer communication on monetary policy to help businesses and investors make informed decisions.
“We need to work on simplifying the way we present forecasts so the public and market participants can better understand the underlying policy story,” Dr. Asiama noted.
The central bank has faced criticism in recent years for failing to provide detailed insights into its policy decisions, with voting patterns and internal debates largely undisclosed. Greater transparency could enhance monetary policy effectiveness by reducing uncertainty in financial markets, according to analysts.
Fiscal pressures and external risks
The Governor also outlined the broader economic landscape, noting that while foreign reserves have strengthened due to strong gold exports and remittance flows, external risks could quickly shift the dynamics.
“We have seen a strong trade surplus and solid reserve build-up on the back of gold exports and remittance flows. But a possible escalation in global tariff wars, rising geopolitical tensions and weakening Chinese demand could quickly shift the dynamics,” he stated.
Domestically, the fiscal consolidation efforts remain under scrutiny following an expansionary 2024 budget that exceeded deficit targets. While early 2025 has shown signs of fiscal restraint, concerns remain over whether ongoing measures will satisfy the International Monetary Fund’s (IMF) programme benchmarks.
“The 2024 fiscal outturn was expansionary, with the deficit exceeding programme targets. We have seen encouraging signs of consolidation early in 2025, but questions remain as to whether current measures are adequate to anchor expectations and satisfy upcoming IMF programme reviews,” Dr. Asiama stated.
Navigating monetary policy challenges
Beyond fiscal concerns, the Governor highlighted liquidity pressures within the banking sector as commercial banks raise concerns about the cash reserve ratio (CRR) framework. The balance between ensuring financial stability and maintaining an accommodative monetary stance remains delicate.
“Liquidity in the system has increased, commercial banks have raised concerns about the CRR framework and we must carefully assess its macro-financial implications – especially with respect to inflation, foreign exchange demand and credit growth,” he explained.
While private sector credit has shown signs of recovery in nominal terms, real credit growth remains subdued. Meanwhile, non-performing loans (NPLs) continue to weigh on the banking sector, though early indications suggest that microfinance and rural banking institutions are stabilising.
Dr. Asiama also acknowledged that some of the current economic challenges stem from past monetary and fiscal missteps, including weak policy coordination and delays in structural reforms. However, he pointed to strong foreign reserves, improving sentiment and a credible policy framework as key buffers in managing macroeconomic risks.
