The Bank of Ghana (BoG) has affirmed its commitment to maintaining a stringent monetary policy stance until inflation shows a consistent downward trend.

In July 2024, the Monetary Policy Committee of the BoG maintained the policy rate at 29.0% for the third consecutive time, as Ghana has experienced a fourth consecutive decline in the inflation rate. Currently, the inflation rate stands at 20.9%.

In a statement to the International Monetary Fund (IMF), the central bank outlined its approach, which aims to steer inflation back within its target range of 8 ± 2 percent.

BoG emphasized that its monetary policy decisions will remain data-driven to ensure a swift and controlled disinflation process toward the set inflation target.

“Our policy decisions will continue to be data-dependent to ensure a fast-paced and orderly disinflation path towards the inflation target; the BoG stands ready to adjust the policy stance to ensure inflation evolves as envisaged under our monetary policy consultation clause (TMU Section II),” the statement read.

Additionally, the central bank reiterated its commitment to absorbing excess liquidity and ensuring the policy rate effectively impacts the market.

"We are committed to continue absorbing excess liquidity and making sure our policy rate is fully transmitted to the market. In doing so, we will review the increased reliance on reserve requirements and the new tiering framework to ensure they deliver on their objectives,” the bank stated.

The BoG is also focused on enhancing its inflation-targeting framework, improving the Forecast and Policy Analysis System (FPAS), strengthening macroeconomic data collection (including the BoG inflation expectations survey), and sharpening its analytical capabilities and communication strategy.

As part of its broader strategy, the central bank aims to rebuild Ghana’s official international reserves to cover at least three months of imports by the end of the IMF program.

However, challenges in the cocoa sector, larger-than-expected payments to Independent Power Producers (IPPs), and uncertainties surrounding debt restructuring have prompted BoG to seek a modification of its Quantitative Performance Criteria (QPC).

The request includes adding an asymmetric adjustor to address unforeseen debt servicing needs related to bondholders and commercial creditors.

Despite these headwinds, BoG remains committed to adhering to its foreign exchange intervention budget as it works towards rebuilding reserves.