The International Monetary Fund (IMF) has advised the Bank of Ghana (BoG) to proceed cautiously with further reductions in its policy rate. This recommendation stems from potential secondary effects of the Middle East conflict on energy and fertiliser prices. The IMF also cited fiscal relaxation under the Policy Coordination Instrument and persistent risks from a high exchange rate pass-through.
Easing the policy rate further could shift Ghana's monetary policy stance from neutral to accommodative, which the IMF deems unwarranted. The Bretton Woods institution believes the BoG is nearing the end of a monetary easing cycle. This cycle has already brought the policy stance to a neutral position.
This advice fits into Ghana's broader economic narrative of balancing inflation control with economic growth. The BoG's Monetary Policy Committee (MPC) reduced the policy rate by 400 basis points to 14% in March 2026. This brought cumulative cuts to 1,400 basis points since July 2025. The MPC then kept the policy rate unchanged in May 2026.
The IMF's caution reflects concerns about maintaining price stability amidst external shocks and domestic policy choices. Inflation is projected to return to the BoG’s target range of 8% ± 2% by the end of 2026. The estimated real neutral rate is around 5.0%. This suggests the current ex-ante real policy rate is broadly consistent with a neutral policy stance.
The BoG has also been reforming its monetary policy operations. In December 2025, the BoG replaced its 56-day bills with 14-day bills to improve liquidity management. This operational change limited the supply of BoG bills, reducing liquidity absorption. It also boosted the use of the standing deposit facility.
These changes pushed BoG bill and interbank rates towards the bottom of the interest rate corridor. This effectively loosened monetary conditions by approximately 350 basis points relative to the policy rate. In June 2026, following IMF staff advice, the BoG unified the cash reserve ratio (CRR) at 20%. This eliminated the previous tiered structure, which had 15% and 25% rates linked to loan-to-deposit ratio thresholds.
The BoG also mandated that the Cash Reserve Ratio (CRR) be fulfilled in cedis. This reversed a May 2025 decision that allowed fulfillment in the currency of deposits. These adjustments modestly increased unremunerated liquidity absorption through the CRR. These measures demonstrate the BoG's ongoing efforts to refine its monetary policy tools. They also highlight the careful balance required to manage inflation and support economic stability in Ghana.
Decision-makers and markets will closely watch how the BoG responds to the IMF's recommendations. Future policy rate decisions will depend on global commodity price movements and domestic fiscal developments. The BoG's commitment to its inflation target and its operational reforms will be key factors. These factors will influence investor confidence and the overall economic outlook for Ghana.