Ghanaians have heard it all before—inflation is going down, things will get better, prices will stabilize. Yet, time and time again, inflation dips for a moment, only to shoot back up, making it nearly impossible to predict the cost of goods and services. Now, there’s a new man in charge at the Bank of Ghana, and expectations are high.
Dr. Johnson Pandit Asiama was sworn in today February 25, 2025 as the new Governor of the Bank of Ghana, and with that, the weight of Ghana’s inflation problem is now on his shoulders. His task is not just to bring inflation down but to keep it down for as long as possible.
At his swearing-in ceremony, Dr. Asiama made it clear that he’s not going at it alone. “We shall coordinate policy efforts with other government agencies, for example, to manage food prices,” he stated. This is a shift from the usual approach, where the central bank largely acted on its own to control inflation through interest rates and money supply adjustments.
With this promise of collaboration, the public now has high expectations. Many are hopeful that by working closely with other agencies, the central bank can finally break the cycle of rising inflation and bring real stability to prices. But after years of inflation climbing back up despite temporary dips, Ghanaians are watching closely to see if this time will be different.
Why Inflation Is a Tough Nut to Crack
Inflation in Ghana has been like an unwanted guest, it leaves for a bit but always finds its way back. For years, the Bank of Ghana has tried to keep it within the target range of 6% to 10% (8% ± 2%), but that goal has remained just out of reach.
Even now, while inflation has dropped slightly from 23.8% in December 2024 to 23.5% in January 2025, it’s still nowhere near the target. Prices keep soaring, and for many, there’s little or no relief in sight.
Monetary Policy vs. Real-World Problems
For years, Ghana has relied on inflation targeting, a strategy that uses interest rates and money supply controls to keep inflation in check. The thinking is simple: when inflation rises, the central bank raises interest rates, making borrowing more expensive and slowing down spending. But does that work in Ghana’s case?
Industry experts have argued that Ghana’s inflation problem isn’t just about too much money in circulation, it’s about real-world supply issues. High fuel prices, rising food costs, and disruptions in supply chains are pushing inflation up, and simply tweaking interest rates doesn’t fix these problems.
This debate sparked criticism from figures like Togbe Afede XIV, who has repeatedly questioned whether the Bank of Ghana’s inflation targeting strategy is actually helping. He argues that focusing too much on interest rates is hurting businesses and making life harder for ordinary Ghanaians.
Ghana’s policy rate currently stands at 27%. At such a high level, borrowing remains expensive, making it difficult for businesses to secure funds for expansion and investment. This discourages economic growth and limits job creation, further worsening the impact of inflation on households.
Dr. Asiama’s Plan: Teamwork Over Tough Talk?
Dr. Asiama seems to recognize this through his focus on collaboration with stakeholders. “We will engage constructively with government and other key stakeholders to always ensure alignment between monetary, fiscal, and other policies,” he said.
This means he’s not just looking at interest rates and bank policies, he’s considering how government initiatives, food production, and supply chain improvements can work together to keep inflation down.
Ghanaians have heard promises before. The real question is whether Dr. Asiama’s approach will finally bring lasting stability. Can his strategy of coordination and engagement break the cycle of inflation that always seems to rise again after a temporary dip? One thing is certain: now is his time to tame inflation.
“We are confident that current levels of inflation will gradually trend back to target range and within the forecast horizon,” he stated.
