The Bank of Ghana’s (BoG) decision to raise the monetary policy rate to 28 percent is a necessary step to strengthen the country’s external buffers, support the Cedi, and reinforce macroeconomic stability, Governor Dr. Johnson Asiama has said.
Speaking during a meeting with Chief Executive Officers of banks in Accra on Wednesday, April 9, Dr. Asiama acknowledged that while the rate hike would inevitably raise borrowing costs for businesses and households, it was a calculated measure to preserve long-term economic stability in an increasingly uncertain global environment.
“The 28% policy rate increase strengthens external buffers, supports the Cedi, and signals our commitment to macroeconomic stability at a time of heightened global uncertainty,” he stated.
Dr. Asiama emphasized that despite the anticipated short-term impact on credit pricing and funding costs, Ghana’s financial system remains strong and is well-positioned to absorb the effects of tighter monetary policy.
“We urge banks to exercise prudence in adjusting lending rates and maintain transparent communication with clients. Viable businesses should continue to receive support, and tailored solutions should be explored to mitigate the impact on the most vulnerable sectors,” he advised.
The BoG Governor further noted that the banking sector has demonstrated resilience, with broad-based improvements in financial stability metrics. He credited the post-Domestic Debt Exchange Programme (DDEP) stabilization efforts, increased liquidity, and ongoing recapitalization for contributing to the sector’s robustness.
“The recent gains in macroeconomic stability, the improved profitability of banks, and high structural liquidity are improving the soundness of the banking sector,” he explained.
According to Dr. Asiama, the Banking Sector Soundness Indicator (BSSI) has continued to show positive momentum, driven by stronger solvency, better asset quality, and robust liquidity. As of end-February 2025, total assets in the sector had expanded by 34.05 percent year-on-year, primarily funded by a 27.89 percent growth in deposits.
The industry remains solvent, recording a Capital Adequacy Ratio (CAR) of 14.35 percent, well above the regulatory minimum of 10 percent, with the majority of banks maintaining buffers above threshold levels.
Nonetheless, the Governor highlighted concerns regarding a few domestically controlled and state-owned banks whose recapitalization efforts remain uncertain.
“Solvency concerns persist for a few domestically controlled and state-owned banks. Addressing the capital shortfalls in these institutions remains a priority,” Dr. Asiama said.
He added that the central bank is working closely with these banks to restore capital adequacy, rebuild depositor confidence, and ensure full compliance with regulatory requirements.
“Our supervisory engagement has intensified to assess the credibility of recapitalization strategies and mitigate potential systemic implications,” he assured.
The meeting formed part of ongoing stakeholder consultations as the central bank navigates the balance between inflation control, financial sector stability, and economic growth recovery.
