Inflation, cedi depreciation put BoG’s MPC under pressure as policy rate decision looms

Inflation and a depreciating Ghanaian cedi are putting pressure on the Bank of Ghana’s Monetary Policy Committee (MPC) as they prepare to decide on the policy rate. The three-day meeting, which began on September 23, 2026, will examine the state of the economy, with a particular focus on the rising inflation rate and the weakening cedi.

Inflation rose to 5% in August 2026, prompting concerns about potential further price increases. This may support the case for a policy rate hike to curb inflation. However, such a decision could impact businesses that are already facing credit access challenges.

The strength of the Ghana cedi is another critical factor in the MPC’s deliberations. Some believe using monetary policy to support the cedi could help stabilize its value in the coming months. Market analysts will also scrutinize developments in the Middle East and recent changes in US interest rates, as these factors could impact Ghana’s economy, including lower gold prices, reduced foreign exchange inflows, slower reserve accumulation, and pressure on the exchange rate.

The gap between inflation and the current policy rate (14%) is still significant, which might suggest caution against further tightening. With inflation at 5% and the policy rate at 14%, the MPC must weigh the risks of further rate hikes against potential impacts on economic activity and credit access. While the Committee will consider global developments, they will primarily rely on economic data to determine the appropriate policy rate decision.

The Bank of Ghana has previously stated that global factors alone would not necessarily dictate an increase in the policy rate. Ultimately, the MPC’s decision will reflect their assessment of the balance among inflation, exchange rate pressures, external developments, and economic growth.