Newly appointed Bank of Ghana (BoG) Governor Dr. Johnson Pandit Asiama chaired the 123rd meeting of the Bank’s Monetary Policy Committee (MPC) yesterday – expected to end on Wednesday, March 26.
Market watchers expect the MPC to increase its benchmark policy rate by 100 basis points to 28 percent, particularly Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA).
Dr. Asiama is on record as stating that the MPC will adopt a more proactive and precise approach to managing inflation by leveraging on advanced data analytics and artificial intelligence.
According to Dr. John Kwakye, an increase in the policy rate would signal a firm stance against inflation – which remains stubbornly above target amid growing concerns over currency stability and declining Treasury bill yields.
“I am therefore inclined to expect the MPC will go for a hike in the PR by 100 basis points from 27 percent to 28 percent,” he indicated.
The expectation comes as Treasury bill yields experienced a sharp decline last week, raising concerns about the real returns on short-term government securities.
The 91-day, 182-day and 364-day Treasury bill (T-bill) rates last week fell by 186 basis points (bps), 204 basis points and 101 basis points week-on-week to 15.86 percent, 16.93 percent and 18.97 percent respectively.
These rates stand in stark contrast to the first week of 2025, when the 91-day, 182-day and 364-day bills settled at 28.33 percent (+14bps), 28.96 percent (+5bps) and 30.17 percent (+2bps) respectively.
This has heightened investor concerns over negative real rates of return, particularly in an environment where inflation remains elevated.
The current inflation figure of 23.1 percent for February 2025 remains substantially above both historical targets and the ambitious new goal set by Finance Minister Dr. Casiel Ato Forson during the 2025 budget presentation.
The minister projected an end-period inflation rate of 11.9 percent by December 2025, suggesting significant monetary tightening may be necessary to achieve this target.
Government missed its 2024 end-year inflation target of 15 percent with December 2024 inflation rising to 23.8 percent, up from 23 percent in November – primarily driven by increases in food prices.
