Cedi's Future Remains Strong, Says Bank of Ghana Governor

The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has assured Ghanaians and investors that the cedi’s outlook remains strong and that its recent favorable performance is set to continue. This reassurance comes as the central bank continues its efforts to stabilize inflation and support the cedi through various strategic monetary policy measures.

Dr. Asiama made these remarks during his speech at the opening of the Bank of Ghana’s Monetary Policy Committee (MPC) meeting in Accra on May 21, 2025. Addressing the committee and attendees, he emphasized that the positive trajectory of the cedi is sustainable and encouraged both local and international stakeholders to remain confident in its long-term stability.

The Governor stated that the recent performance of the cedi reflects a combination of well-calibrated monetary policies by the BoG, improving investor sentiment, and positive developments in Ghana’s external sector. He assured shareholders and Ghanaians that there is no cause for panic regarding the cedi’s stability, pointing to the central bank’s continued commitment to maintaining its strength and resilience.

Factors Contributing to the Cedi’s Positive Performance

Dr. Asiama attributed the cedi’s appreciation to a blend of domestic and external factors. These include the BoG’s prudent monetary policy decisions, an improved outlook for Ghana’s economy, and growing confidence in the nation’s financial markets.

He highlighted that Ghana has shown encouraging progress in macroeconomic fundamentals, citing the positive outcomes from the country’s Staff-Level Agreement with the International Monetary Fund (IMF) on the Fourth Review of the Extended Credit Facility (ECF) program. While some prior actions are still pending, Dr. Asiama noted that the economic trajectory is moving in a positive direction. He also referenced the recent upgrade of Ghana’s sovereign credit rating by S&P from Selective Default to CCC+, which signals improved investor confidence and a better economic outlook for the country.

Additionally, the Governor pointed out that Ghana’s external reserves have strengthened, and the country’s trade balance has improved. These factors, coupled with rising consumer and business confidence indices, have further bolstered the cedi’s performance.

Challenges and External Risks

Despite the positive developments, Dr. Asiama acknowledged that challenges remain. Inflation continues to pose a significant concern, particularly due to potential second-round effects and food supply constraints. He also raised concerns over the current global economic landscape, including geopolitical tensions and trade disputes such as the ongoing US-led tariff disputes. These factors could affect commodity prices, financial flows, and exchange rates, which could, in turn, influence Ghana’s economy.

Dr. Asiama assured the committee that the BoG is actively monitoring these risks and has already begun reviewing its monetary policy framework to address them effectively. In particular, the central bank is transitioning from relying on the unremunerated Cash Reserve Ratio to a more active Open Market Operations (OMO) regime. This new approach includes the use of longer-tenure BoG instruments to manage liquidity more effectively, enhance policy transmission, and create space for credit expansion to the private sector.

Policy Adjustments and Strategic Focus

Looking ahead, Dr. Asiama called on the MPC to evaluate whether the current monetary policy stance is adequate to balance inflation control with maintaining economic growth. He emphasized that, while managing inflation remains a priority, it is crucial not to undermine the fragile growth momentum that the economy has experienced in recent months.

The Governor outlined key considerations that the MPC will need to assess in the coming months:

The sustainability of the cedi’s recent appreciation.
The durability of the market confidence that has been restored.
The potential impact of these developments on Ghana’s inflation forecast for the medium term.

In closing, Dr. Asiama reiterated the Bank of Ghana’s commitment to ensuring a stable and conducive economic environment for both local and international investors. He assured the public that the measures being implemented are designed to mitigate risks, foster long-term growth, and preserve the stability of the cedi.

Dr. Asiama’s remarks reflect the Bank of Ghana’s proactive stance in navigating both domestic and global economic challenges while safeguarding the nation’s financial stability. The coming months will be critical in evaluating the continued success of these policies and their impact on Ghana’s overall economic trajectory.