Asiama: BoG Staying Vigilant as Global Risks Threaten Inflation Target
Bank of Ghana (BoG) Governor Dr Johnson Asiama has cautioned that although inflation is projected to remain within the central bank's target range, emerging global and domestic risks require continued policy vigilance to safeguard Ghana's recent macroeconomic gains.
Addressing journalists after the Monetary Policy Committee (MPC) meeting, Dr Asiama said renewed geopolitical tensions, particularly the ongoing volatility in the Middle East, remain a major threat to the country's inflation outlook.
According to him, developments in the region could continue to exert upward pressure on energy prices, with potential spillover effects on Ghana's economy.
"From the global scene, you are aware that there's renewed volatility arising from the crisis in the Middle East. At the last MPC meeting, I explained how that impacts Ghana through higher energy prices. That impact is expected to continue," he said.
The governor also disclosed that core inflation, which excludes volatile items and reflects underlying price pressures, has begun rising after previously declining, indicating changes in some of the key drivers of inflation.
He explained that these developments influenced the committee's latest monetary policy decision, stressing that the central bank must remain responsive to evolving economic conditions.
"There have been some changes in the underlying factors, which is why we believe policy has to take these developments into account," Dr Asiama noted.
Despite these risks, the BoG governor expressed confidence that inflation would remain within the bank's medium-term target band based on current projections.
"Based on our projections, we believe inflation will still fall within the target band. However, that requires us to remain vigilant about the risks ahead," he stated.
Dr Asiama identified global developments as the biggest upside risk to inflation, particularly uncertainty surrounding the Strait of Hormuz, a critical global oil shipping route.
He warned that any prolonged disruption in the region could significantly affect global energy prices and, by extension, Ghana's inflation outlook.
"Whatever happens in the Strait of Hormuz, if it becomes persistent, could impact the outlook," he said.
The governor further pointed to potential utility tariff adjustments as another factor that could put upward pressure on inflation in the coming months.
He said these risks were carefully considered by the Monetary Policy Committee in reaching its latest decision to maintain a cautious monetary policy stance.
"Vigilance is the key word. Through this policy action, we are ensuring that the risks to the inflation outlook are properly contained," Dr Asiama stressed.
His comments come after the Monetary Policy Committee maintained the policy rate at 14 per cent, citing heightened global uncertainty, renewed inflationary risks and the need to preserve macroeconomic stability while keeping inflation firmly within target.
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