Bank of Ghana maintains medium-term inflation target at 8 percent

The Bank of Ghana (BoG) has reaffirmed its commitment to a medium-term inflation target of 8 ± 2 percent, despite a slight uptick in headline inflation during September 2026. Following the 132nd Monetary Policy Committee (MPC) meeting, the central bank indicated that while domestic economic conditions remain generally favorable, external pressures and domestic fiscal risks necessitate a cautious stance to ensure long-term price stability. The decision comes at a time when the bank is balancing the need for growth with the necessity of curbing underlying price pressures.

According to the latest data, headline inflation rose for the third consecutive month, reaching 5.2 percent in September from 5.0 percent in August. This trend was largely driven by food inflation, which climbed to 4.0 percent from 3.0 percent the previous month. Overall Consumer Price Inflation recorded a month-on-month increase of 1.1 percent. Despite these increases, the MPC noted that core inflation and easing inflation expectations suggest that underlying price pressures could moderate in the coming months, supported by improved food supply conditions and ongoing fiscal consolidation.

The central bank expressed specific concerns regarding the government’s fiscal policy implementation for 2026. The BoG highlighted that increased government spending and potential challenges in debt management and project execution could pose downside risks to the inflation outlook. Furthermore, external factors, such as the US-Iran conflict and its subsequent impact on global oil price volatility, remain significant threats. Domestically, the central bank warned that adjustments to utility tariffs and petroleum prices are expected to exert upward pressure on the non-food component of the inflation basket.

To mitigate these risks, the Bank of Ghana emphasized the importance of enhanced domestic revenue mobilization and strengthened fiscal management. The Committee stressed that maintaining stable GDP growth, lower interest rates, and exchange rate stability is crucial for avoiding debt distress and fostering sustainable economic growth. Moving forward, the bank remains focused on aligning fiscal and monetary policies to ensure that inflation stays within the target band amidst an evolving global economic landscape.