The Bank of Ghana (BoG) has postponed its target for achieving single-digit inflation to the second quarter of 2026, a year later than its earlier projection of Q2 2025.
This revision was announced by Dr. Ernest Addison, Governor of the BoG and Chairman of the Monetary Policy Committee (MPC), during the 122nd press briefing on January 27, 2025.
The delay comes in response to persistent pressures from rising food prices, which disrupted the disinflation momentum observed for much of 2024.
The BoG’s initial forecast relied on steady inflation declines since January 2023, following a peak of 54% in December 2022. However, climate-related factors such as delayed rainfall and supply chain inefficiencies have led to a sustained rise in food prices, prompting a reassessment of inflation timelines.
“While the inflation outturn for 2024 deviated from the target, the disinflation process is expected to resume, supported by fiscal consolidation efforts outlined in the new administration’s economic policy agenda and the upcoming 2025 budget statement,” Dr. Addison noted.
To stabilize inflationary pressures and anchor expectations, the MPC opted to maintain the policy rate at 27% for the second consecutive time, following a reduction from 29% in September 2024.
Dr. Addison explained, “The inflation profile remains elevated, primarily due to food price dynamics in the final quarter of 2024. Adverse climate conditions in key agricultural regions and ongoing supply chain weaknesses contributed significantly to the rise in food prices.”
The BoG’s updated inflation forecast indicates a steady decline, but with an extended horizon for reaching its medium-term target of 8% ± 2%. The bank expects renewed fiscal discipline and structural policy adjustments to support the disinflation trajectory.
The decision to hold the monetary policy rate signals a commitment to managing inflationary risks while allowing time for the economy to align with fiscal and structural reforms anticipated in 2025
Last Updated on March 16, 2025 by samboad
