BoG weighs on rising inflation risks as inflation climbs to 5%

The Bank of Ghana is closely monitoring the recent surge in inflation, which has reached 5.0% in August, according to the Monetary Policy Committee. This increase is based on the central bank's recent assessment, as reported by the Governor of the Bank of Ghana, Dr Johnson Asiama, during the opening of the 132nd MPC meeting. Dr Asiama noted that headline inflation has risen from 3.2% in March, marking a 1.8 percentage point increase over the past five months.

While inflation remains below the lower bound of the Bank’s target band of 8% ±2%, the upward trend has raised concerns about its potential impact on the economy. Dr Asiama stated that the committee needs to determine whether the anticipated rise in inflation in the coming months will be a temporary adjustment caused by higher energy prices and administrative tariffs or if it may evolve into more persistent pressure on inflation expectations.

He emphasized that while the current level is still well below the lower bound of the target band, the direction of inflation has been upward. Thus, the MPC will closely evaluate whether the recent rise in inflation represents a temporary adjustment or could potentially disrupt inflation expectations. In addition to assessing inflation, the committee's deliberations will also consider developments in Ghana's external position and the interaction between fiscal and monetary policy.