BoG Governor Attributes Sharp Inflation Decline to Fiscal Discipline and Strong Policy Coordination

Inflation: The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has attributed Ghana’s sharp decline in inflation to sustained fiscal and monetary discipline, improved food supply conditions, and enhanced coordination among key state institutions.

According to the Governor, the gains recorded in the economy over the past year were the result of deliberate, policy-driven actions, rather than chance.

“These developments have not happened by accident,” Dr. Asiama said. “They are the outcome of sustained monetary discipline, improved food supply conditions throughout 2025, and closer coordination across key policy institutions, particularly the Bank of Ghana and the Ministry of Finance.”

Remarks During Asantehene’s Courtesy Visit

Dr. Asiama made the remarks on Wednesday, January 7, when the Asantehene, Otumfuo Osei Tutu II, paid a courtesy call on the Bank of Ghana at its headquarters in Accra. The visit provided an opportunity for the central bank to outline Ghana’s improving inflation outlook and strengthening external position.

The Governor disclosed that inflation, which stood at 23.8 per cent in December 2024, has declined consistently over the past year.

“By October 2025, inflation had dropped to 8 per cent. In November, it declined further to 6.3 per cent, and this morning we received confirmation that inflation for December 2025 has fallen to 5.4 per cent,” he announced.

Broad-Based Disinflation Creates Policy Space

Dr. Asiama explained that the disinflation process has been broad-based, covering both food and non-food components, and has allowed the central bank to cautiously ease its monetary policy stance.

“As inflationary pressures eased and expectations began to re-anchor, the Bank of Ghana recalibrated its policy position,” he said. “The monetary policy rate was reduced in phases from 27 per cent to 18 per cent as of our last Monetary Policy Committee meeting in November.”

He emphasized that the easing was carefully sequenced to protect the progress already made.

“We deliberately struck a balance between preserving the hard-won disinflation gains and supporting recovery in credit growth and economic activity,” the Governor noted.

Record-Breaking External Reserves

Turning to Ghana’s external buffers, Dr. Asiama revealed that the country’s gross international reserves have risen to historic levels, reaching over US$13.8 billion.

“This is unprecedented. I joined the Bank of Ghana in 1995, and I have never seen reserves at this level,” he said.

According to the Governor, the reserves now provide nearly six months of import cover, a development he described as a major milestone in the central bank’s history.

“Our trade performance has improved significantly, and confidence in Ghana’s macroeconomic management has strengthened,” he added.

Cedi Performance and Exchange Rate Stability

On the exchange rate, Dr. Asiama noted that the cedi ended 2025 stronger than many analysts had anticipated.

“According to Forbes, a year-end exchange rate of about 10.67 cedis to the US dollar placed the cedi among the stronger-performing currencies on the African continent,” he said.

However, the Governor cautioned against complacency, stressing that exchange rate stability must be sustained through sound economic fundamentals.

“Exchange rate stability is not something that can be declared; it must be earned continuously,” he said. “A currency remains strong only when the economy beneath it is productive, competitive, and disciplined.”

Call for Sustained National Discipline

Dr. Asiama warned that maintaining the current gains would require difficult national choices, including fiscal restraint over excess, production over consumption, exports over imports, and long-term thinking over short-term comfort.

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He reaffirmed the Bank of Ghana’s commitment to safeguarding the progress achieved.

“The Bank of Ghana remains fully committed to playing its role firmly, independently, and professionally so that the gains we are beginning to see become durable and inclusive,” he concluded.

Source: Bank of Ghana