Bank of Ghana Holds Key Interest Rate at 14%

ACCRA, Ghana — The Bank of Ghana’s Monetary Policy Committee (MPC) unanimously decided to keep its main interest rate unchanged at 14.0 percent, citing persistent global economic risks stemming from renewed Middle East geopolitical tensions, energy market volatility, and potential domestic price pressures.

The central bank announced the policy decision Wednesday following its 131st regular meeting, concluding three days of discussions from July 20 to July 22.

“Given these considerations, the Committee, by unanimous decision, maintained the Monetary Policy Rate at 14.0 percent,” the committee said in a press statement. “The Committee judged that the current policy stance remains appropriate to guide inflation into the medium-term target band, while allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy.”

The central bank noted that a fresh escalation of the conflict in the Middle East led to another closure of the Strait of Hormuz, causing oil prices to surge above $85 per barrel and triggering market instability.

“Disinflation trends in several countries have stalled as energy prices have risen sharply, prompting many central banks to pause their monetary policy easing cycles in response to emerging inflationary risks,” the committee said.

Domestically, Ghana’s headline inflation accelerated to 5.3 percent in June 2026, up from 3.7 percent in May, primarily driven by base effects and higher transport fares caused by global crude oil price spikes. Despite the uptick, inflation remains below the lower bound of the central bank’s medium-term target range of 8% ± 2%.

“Potential upward adjustments in utility tariffs, together with escalating geopolitical tensions in the Middle East and the associated increase in crude oil prices, present upside risks to the inflation outlook,” the committee warned. “On the downside, continued fiscal consolidation and an appropriately calibrated monetary policy stance should help moderate these risks.”

Notwithstanding global headwinds, the central bank highlighted the resilience of Ghana’s domestic economy. Real GDP grew 6.4 percent in the first quarter of 2026—up from 6.2 percent a year earlier—driven by gains in the services and industrial sectors. The Bank’s Composite Index of Economic Activity (CIEA) surged 13.4 percent year-on-year in May 2026, compared to 4.4 percent growth in May 2025.

In addition, lower cost of credit fueled a 41.2 percent year-on-year surge in private sector credit growth in June. Banking sector health also improved significantly, with non-performing loans (NPLs) falling to 16.1 percent in June from 23.1 percent a year prior.

Ghana’s trade surplus widened to $8.8 billion in the first half of the year, up from $5.8 billion in the same period in 2025, supported by strong gold and cocoa export revenue. However, gross international reserves fell from $13.8 billion at the end of December 2025 to $12.9 billion (5.0 months of import cover) by June 2026, largely due to higher energy-related import costs.

The cedi cumulatively depreciated by 9.5 percent against the U.S. dollar in the year through July 17.

The next MPC meeting is scheduled for September 22 to 24, with the policy decision set to be announced at its conclusion.