The Bank of Ghana's Monetary Policy Committee (MPC) has decided to maintain the policy rate at 14%, with all seven members voting in favor of the decision. According to the Policy Decisions document released by the Bank of Ghana, the majority of MPC members cited external risks to the economy and concerns about rising inflation as their major reasons for the rate hold. The decision was made on September 26, 2026.
One MPC member noted that the external environment has become less favorable, which could be exacerbated by potential weather-related disruptions associated with El Niño. This development poses upside risks to the inflation outlook and warrants a cautious monetary policy stance. The member expressed worry that these developments could lead to higher imported inflation and renewed pressure on the exchange rate and external sector.
Rising fuel and food prices, as well as shipping costs, were also cited as major concerns by another MPC member. The member noted that these factors could lead to higher energy and transport costs. However, most members who voted for the rate to be maintained believed that keeping the policy rate unchanged would allow the committee to assess the persistence of recent inflation developments and the potential impact of external shocks on the medium-term inflation path.
Inflation was a major concern for MPC members, particularly the drivers of non-food inflation. Their concerns were influenced by the quarterly utility tariff adjustment and rising domestic petroleum prices. Some members were optimistic that despite recent pressures, inflation would fall back to their medium target of 8%+/-2 plus 2. Others were worried about potential exchange rate pressures arising from heightened external uncertainty.
Despite recent pressures, the majority of MPC members highlighted a strong Ghanaian economy. They cited a real Gross Domestic Product (GDP) growth of 6.0% in the second quarter of 2026, while the Composite Index of Economic Activity (CIEA) expanded by 14.9% year-on-year in July 2026, signaling continued growth momentum. Business and consumer confidence also remained near historical highs, and private sector credit growth has accelerated.
Ghana's International Reserves declined from a high of US$14 billion to US$12 billion on September 22, 2026, due to record-elevated payment obligations and rising external debt service in the period ahead. The MPC members acknowledged the decline in reserves and its potential implications for the economy.
The decision to maintain the policy rate at 14% reflects the MPC's cautious approach to monetary policy. The committee's concerns about inflation and external risks are balanced against the need to support economic growth. The policy rate decision will take time to reflect in lower lending rates, according to the Bank of Ghana.
Key points
- All seven MPC members voted to maintain the policy rate at 14%.
- External risks and rising inflation were cited as major reasons for the rate hold.
- The MPC members highlighted a strong Ghanaian economy despite recent pressures.
