BoG flags external-sector pressures ahead of MPC decision

The Bank of Ghana has highlighted external-sector pressures as a key risk the Monetary Policy Committee (MPC) must consider when deciding on policy. Governor Dr Johnson Asiama pointed to declining international reserves, a widening current account deficit and slowed gold shipments as factors that need careful evaluation ahead of the upcoming policy decision.

With gross international reserves currently covering only about 4.2 months of imports, the current account projected to be in the red in the third quarter, and gold exports paused since mid-August, rebuilding reserves is seen as a priority for the central bank. Dr Asiama emphasized that the external position will determine the extent of policy space available to the Bank of Ghana, even as domestic conditions remain relatively stable.

He also noted rising global risks, with the Middle East conflict driving up energy prices and tightening global financial conditions. Brent crude prices have risen from above $85 per barrel to about $107 per barrel since the last MPC meeting. A stronger US dollar and tighter global financial conditions have also been weighing on emerging-market currencies, including the cedi.

Domestically, headline inflation was 5% in August, though still below the Bank's target band of 8% ±2%, but the increase from a low of 3.2% in March to 5% has prompted the committee to assess whether the rise could become persistent. The MPC is also expected to review developments in private-sector credit, fiscal policy and the impact of higher domestic borrowing on liquidity and the exchange rate.

At the previous meeting in July, the committee unanimously maintained the policy rate at 14%. The 132nd MPC, the first under Ghana's new 36-month Policy Coordination Instrument with the International Monetary Fund, approved by the IMF Executive Board in July 2026, will focus on whether the current policy rate remains an appropriate tool to anchor inflation expectations given the evolving risk landscape.