BoG Slashes Inflation Forecast to 12%

The Bank of Ghana (BoG) has revised its end-year inflation target for 2025 from an earlier projection of 16% down to 12%.

The Bank of Ghana (BoG) Governor Dr. Johnson Asiama made this announcement, expressing strong confidence that the Central Bank’s monetary tightening measures combined with ongoing fiscal consolidation efforts by the government can deliver this goal.

This downward revision marks a significant shift in the BoG’s inflation outlook and reinforces its commitment to macroeconomic stability at a time when inflation remains one of the most pressing challenges for the Ghanaian economy. If successful, achieving a 12% inflation rate by December 2025 would represent the country’s lowest rate in four years and signal a turning point in Ghana’s economic recovery agenda.

The revised 12% target reflects growing optimism within the BoG, underpinned by recent monetary policy actions and an improving inflation trend. Inflation fell for a third consecutive month in March 2025, reaching 22.4%, down from 23.1% in February. This consistent easing has emboldened policymakers, suggesting that price pressures especially those related to food and energy may be responding to interventions taken over the past year.

At its last Monetary Policy Committee (MPC) meeting, the BoG raised the policy rate by 100 basis points to 28%.

The move was aimed at strengthening the cedi, reducing inflation expectations, and tightening liquidity conditions in the economy.

According to Dr. Asiama, this policy action, combined with complementary fiscal discipline, should help anchor inflation expectations in the months ahead.

Dr. Asiama also hinted at the possibility of further action when the MPC reconvenes on May 22, stating, “The Bank of Ghana will take the required actions based on our data.”

 This leaves the door open for another rate hike if inflation does not fall quickly enough to keep pace with the new 12% target.

Exchange rate stability is a key pillar of the BoG’s strategy. The cedi has come under pressure in recent months, driven by seasonal import demand and global interest rate developments.

However, Dr. Asiama pointed to signs of stabilization in the currency market, supported by the BoG’s forex interventions and remittance inflows. A more stable cedi reduces the cost of imported goods and helps curb inflationary pass-through from external shocks.

Moreover, food inflation—a major driver of headline inflation—has shown signs of moderating, thanks to improved domestic supply and easing global food prices. Policymakers are banking on these favorable trends to persist, reinforcing the effects of tighter monetary policy.