Don’t Panic Cedi Stability to Continue: Bank of Ghana Assures Amid Economic Reforms

The Bank of Ghana has assured the public that the stability of the cedi will continue, driven by key reforms aimed at consolidating recent gains. The local currency has appreciated by nearly 19 percent year-to-date, thanks to coordinated fiscal discipline and tight monetary policy measures. Governor Dr. Johnson Asiamah emphasized that the next phase of reforms will focus on sustaining foreign exchange inflows and tightening regulatory oversight in the forex market.

Recent Gains

The cedi’s appreciation has been driven by a combination of factors, including prudent monetary policy, improved market sentiment, and external sector gains. Dr. Asiamah noted that the appreciation has helped ease imported inflation pressures and restore public confidence. “Importantly, the cedi has appreciated sharply by nearly 19 percent between April and May, helping to ease imported inflation pressures and restore public confidence”.

Challenges Ahead

Despite the improving outlook, Dr. Asiamah cautioned that significant challenges persist. The inflation outlook remains vulnerable to second-round effects, food supply constraints, and external price shocks. Geopolitical tensions and evolving global trade dynamics also pose a risk to the economy. “Geopolitical tensions and evolving global trade dynamics, including the recent US-led tariff disputes, have heightened market uncertainty and could affect commodity prices, exchange rates, and financial flows in emerging markets like ours”.

Monetary Policy Committee Meeting

The Bank of Ghana’s 124th Monetary Policy Committee meeting is currently underway, with the market expecting a policy rate retention to guide lending rates and overall economic recovery. The Committee had raised the policy rate by 100 basis points to 28% at its last meeting in March, a move deemed necessary to anchor inflation expectations.

Expectations

The meeting, which will end on Friday, May 23, 2025, is expected to provide further guidance on the Bank’s monetary policy stance. The public and market stakeholders are eagerly awaiting the outcome, which will likely have implications for lending rates, economic recovery, and overall financial stability.

Conclusion

The Bank of Ghana’s assurance of cedi stability is a welcome development, given the recent gains made by the local currency. As the economy navigates challenges ahead, the Bank’s reforms aimed at sustaining foreign exchange inflows and tightening regulatory oversight will be crucial in maintaining stability. The outcome of the Monetary Policy Committee meeting will provide further insight into the Bank’s policy direction and its commitment to promoting economic stability.

Source: Africa Publicity