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The Bank of Ghana incurred significant financial costs in 2025 to bring inflation under control, Governor Johnson Pandit Asiama has disclosed.
Speaking at the Governor’s Roundtable during the Kwahu Business Forum, Asiama noted that the country’s disinflation strategy—though effective—required aggressive monetary tightening and substantial liquidity management efforts.
According to him, the central bank relied heavily on open market operations to absorb excess liquidity from the financial system, a move that came at considerable expense.
“While the outcome was positive, it required significant resources to reduce inflation and stabilise the economy,” he said, highlighting the inherent trade-offs involved in monetary policy decisions.
Inflation decline and policy trade-offs
Ghana’s inflation rate dropped sharply from 23.8 per cent in December 2024 to 5.4 per cent by the end of 2025, reflecting the impact of sustained tightening measures.
The Governor explained that such policies, while necessary to restore price stability, often impose financial burdens on central banks due to the cost of sterilising liquidity and maintaining policy effectiveness.
He added that exchange rate stability was another key outcome of the intervention, noting that the cedi has remained relatively stable following the policy actions.
Outlook for 2026
Despite the high costs incurred, Asiama expressed optimism that maintaining low inflation in 2026 would require fewer resources, citing improving macroeconomic conditions.
He noted that once inflation is brought under control, sustaining stability becomes less resource-intensive compared to the initial disinflation phase.
Global context and financial sector role
The Governor also pointed out that the challenge is not unique to Ghana, as central banks worldwide—including the Federal Reserve and the European Central Bank—face similar cost pressures when implementing anti-inflation measures.
He emphasised that controlling inflation remains critical to protecting purchasing power and ensuring long-term macroeconomic stability.
Asiama further highlighted the importance of a resilient banking sector, noting that stronger financial institutions are better positioned to extend credit to businesses and support economic growth.
The Bank of Ghana, he said, will continue to balance inflation control with growth objectives, while working closely with the financial sector to sustain economic recovery.
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