Ghana: BoG Governor Highlights Policy Trade-Offs at Kwahu Business Forum

The Governor of the Bank of Ghana, Johnson Pandit Asiama, has underscored the complex trade-offs involved in central banking, as he engaged stakeholders at the Kwahu Business Forum Governor’s Roundtable.

Speaking during the session, Asiama reflected on Ghana’s economic performance in 2025, noting that while key indicators improved significantly, the gains came with notable costs—particularly in the effort to tame inflation.

Balancing inflation and growth

Addressing concerns from the business community, the Governor explained that achieving low inflation required aggressive monetary tightening and liquidity management.

He revealed that inflation dropped sharply from 23.8 per cent in December 2024 to 5.4 per cent by the end of 2025, driven largely by sustained open market operations aimed at mopping up excess liquidity.

While the outcome strengthened macroeconomic stability—including exchange rate improvements—he acknowledged the financial burden placed on the central bank.

“The work of a central bank is always about trade-offs—striking the right balance between controlling inflation and supporting economic growth,” he noted.

Cost of disinflation

Asiama described 2025 as a “successful but expensive” year, highlighting the significant increase in the cost of monetary operations, particularly through liquidity-absorbing instruments.

He explained that such interventions, though necessary, often weigh on the central bank’s balance sheet, a challenge faced by monetary authorities globally.

Institutions such as the Federal Reserve and the European Central Bank, he added, confront similar policy dilemmas when tackling inflation.

Outlook and collaboration

Looking ahead, the Governor expressed optimism that maintaining price stability in 2026 will require fewer resources, given the current low inflation environment.

He emphasised that once inflation is stabilised, sustaining it becomes less costly compared to the initial disinflation phase.

Asiama also highlighted the importance of a strong and resilient financial sector, noting that well-capitalised banks are better positioned to extend credit and support business growth.

He called for closer collaboration between the central bank and the private sector to strengthen financial markets and sustain economic progress.

Protecting economic stability

The Governor reiterated that despite the high operational costs, controlling inflation remains essential to safeguarding purchasing power and ensuring long-term economic stability.

He assured stakeholders that the Bank of Ghana will continue to pursue balanced policies that promote both price stability and economic expansion, while minimising future cost pressures.