The Governor of the Bank of Ghana, Dr Johnson Pandit Asiama on Sunday, 5 April, participated in the Kwahu Business Forum Governor’s Roundtable session to discuss Ghana’s economic development and its impact on the business community.
Governor Asiama used the occasion to reflect on Ghana’s economic progress in 2025, also highlighting the difficult policy decisions central banks face globally. Touching on inflation, which is of particular interest to the business community, Dr Asiama explained that the current low inflation rate had come at a huge cost to the central bank.
Dr Asiama highlighted the stable exchange rate, among other strong macroeconomic data, stating, “The Cedi is stable and under control.”
He emphasised the unique position of central banks and the trade-offs influencing their decisions, saying, “the work we do is always about trade-offs… trying to strike the right balance.”
Dr Asiama explained that achieving the right balance between policies affecting growth and inflation is crucial.
He acknowledged the positive impact of the strong macroeconomic performance in 2025 on the broader economy but noted the associated costs to the central bank.
“Last year was good but expensive for the central bank. It took us a lot of money to mop up excess liquidity and bring inflation down to 5.4% by December 2025.”
He further explained that the central bank’s monetary operations aimed to drain excess liquidity, and while the cost was high in 2025, he was confident that 2026 would be different.
“If you look at where inflation was at the end of December 2024 and where it is now, it wouldn’t involve the same level of resources to keep it low and stable going forward.”
Dr Asiama concluded by emphasising the importance of collaboration, assuring the business community that the central bank aims to strengthen the markets. “when banks are strong, they can give more credit.”
Indeed, central banks are unique institutions playing a pivotal role in economic development. Central bank mandate is to maintain economic stability through fighting inflation to ensure that it remains low and stable.
Stable inflation helps economies grow are in fighting it central banks face difficult policy choices. The choice is difficult because the tools used to mop up excess liquidity from the economy come with heavy cost, which often impairs central bank balance sheet.
In the case of the Bank of Ghana, the BOG Bills, which commercial bank buys are costly, especially looking at the impact of policy rate in the issuance of such bills. Other central banks and monetary authorities, like the US Federal Reserve and the European Central Bank, face similar challenges.
In 2025, a cursory look at the inflation rate shows that it dropped from 23.8% at end-December 2024 to 5.4% at end- December 2025.
Reducing inflation by such a magnitude wouldn’t be cheap to the central bank and at the last Monetary Policy Committee press briefing the Governor hinted that the cost of Open Market Operations (the Bank’s activities on the market) went up significantly in 2025 because of the mopping up exercise.
But central banks can’t stand aloof and allow inflation to take a chuck off the disposal incomes of citizens because of cost.
Whereas incomes may remain the same, every inch up in inflation affects the real incomes of the population.
Looking ahead, Governor Asiama has assured that the 2025 OMO cost would not be repeated in 2026 because of the low and stable inflation environment currently.
And the maths confirm this. In 2025, inflation was reduced by 18.4 percentage points. However, with current inflation at below 4 % that would not be the case when fighting it. It looks all good in 2026.
