BoG's disciplined policies drove inflation down to 3.8% - Financial analyst

The Bank of Ghana (BoG) has earned widespread commendation for its pivotal role in reducing inflation from 23.8 percent in December 2024 to 3.8 percent in January 2026, according to data from the Ghana Statistical Service.

Finance and Energy Policy Analyst, Richmond Eduku, has attributed the sharp decline in inflation to the central bank’s disciplined monetary policy stance, effective liquidity management, and credible communication strategy, which together have helped restore confidence in the Ghanaian economy.

Speaking on the impact of the Bank’s actions, Eduku stated, “The Bank of Ghana deserves commendation for its strategic and well-executed policies, which have not only brought inflation under control but have also strengthened the financial system, stabilised the cedi, and created a favourable environment for business investment and household planning.”

Cedi holds steady at GH¢10.97 to $1

The central bank’s approach combined prudent interest rate management with targeted liquidity operations. The Monetary Policy Rate (MPR) was maintained at 27 percent at the start of 2025 to anchor inflation expectations, briefly raised to 28 percent in March 2025 to signal policy resolve, and subsequently reduced gradually to 15.5 percent by January 2026 as inflation steadily declined.

These measures ensured that borrowing costs were carefully calibrated to support economic activity without reigniting price pressures.

In addition, the BoG’s liquidity management and market operations played a critical role in stabilising the financial system. By absorbing excess liquidity and fine-tuning cash reserves, the Bank ensured that the gradual easing of interest rates did not flood the market with excess money that could have undermined its anti-inflation efforts.

Meanwhile, credible communication, through detailed press releases, public briefings, and transparent disclosure of policy decisions, helped anchor market expectations and strengthen public confidence in the Bank’s strategy.

These coordinated efforts have yielded tangible benefits for ordinary Ghanaians. With inflation now at a manageable level, the cost of living has stabilised, household purchasing power has improved, and businesses are better able to plan and invest with greater certainty.

Private sector credit has begun to expand as borrowing costs declined, while gross international reserves increased to US$13.8 billion, enhancing the resilience of the cedi and the broader economy.

Eduku emphasised that the Bank’s performance represents a strong model of credible and effective central banking in emerging markets.

“Ghana now has a central bank that acts decisively and strategically, balancing the twin goals of price stability and economic growth. This achievement is a major boost for both investors and everyday Ghanaians,” he added.

The BoG’s success comes at a critical time, providing a solid foundation for sustainable economic growth and reinforcing confidence in Ghana’s financial system.