Inflation ‘uncomfortably high’, new central bank governor says

The recently appointed Central Bank governor Dr Johnson Asiamah declared on Monday that inflation continues to display higher-than desirable rates and would require a moderate monetary policy. The rate of inflation was 23.1% in February, decrease from a high over 54% in December 22 but notably exceeding the Bank of Ghana’s targets of 8% with an error margin of 2 percentage points.

The Reuters Daily Briefing newsletter makes available all the news you need to start your day.

The West African gold and cocoa producer experienced significant defaults rates on its external debt in 2022, resulting to a turbulent restructuring efforts which is at its final stage.

“As inflation slows, inflation is still higher than desired and progress has been slow,” the recently appointed bank governor Johnson Asiama  stated in a welcome address ahead of his first monetary policy meeting. He said that “Our task over the next few days is … to reach a policy stance that reinforces the disinflation path without undermining the recovery or destabilising market expectations.”

The bank’s Financial Policy Board  is expected to reveal its next rate decision on March 28.  Dr Cassiel Ato Forson, Finance Minister said in his budget address this month that drastic budget reductions will enable Ghana to bring down inflation sharply to 11.9% by the end of the year.

Dr Johnson Asiama, at the same time urged caution. Dr Johnson Asiama said the exportation of gold and remittances made contribution to a export surplus and reserve build-up but that global tariffs, international strains and weakening Chinese demand raised concerns.

He also noted that it was unclear whether existing tax policies would be enough to satisfy the International Monetary Fund’s reviews of its three-year loan initiative with Ghana, the next of as predicted in April.

Asiama has worked at the Bank of Ghana for more than 23 years, serving as a second deputy governor from 2016-17.