BoG raises policy rate to 28% on inflation concerns

The Bank of Ghana (BoG) has raised its benchmark policy rate by 100 basis points to 28 percent, citing persistent inflationary pressures despite signs of economic recovery.

The decision, announced by Governor, Dr. Johnson Asiama at a press briefing in Accra, reflects the central bank’s ongoing effort to maintain price stability while balancing economic growth concerns.

The policy adjustment comes amid respectable Gross Domestic Product (GDP) growth, improving credit conditions, and a stable banking sector.

However, inflation remains elevated at 23.1 percent as of February 2025, largely driven by food prices and external pressures.

Defending the rate hike, Dr. Asiama said the central bank’s priority is to bring inflation under control, despite concerns from businesses about the cost of borrowing.

“Inflationary risks remain elevated, and while the trend is improving, underlying pressures persist. Our decision is firmly rooted in the need to bring inflation down to our medium-term target,” he stated.

The move suggests the central bank is willing to tolerate some economic slowdown in the short term to ensure long-term stability.

Business leaders warn that higher borrowing costs could dampen private sector investment, but the central bank maintains that stability is paramount.

“The private sector credit recovery is encouraging, but we must ensure that this expansion does not fuel inflationary pressures. A stable macroeconomic environment is essential for sustained growth,” Dr. Asiama added.

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