Ghana’s Central Bank Walks Tightrope as Inflation Falls but Cedi Weakens
Ghana’s inflation slowed for the eighth consecutive month in August, dropping to 11.5%, the lowest level since late 2021. Prices for food and non-food goods have eased, giving households and businesses some relief after years of double-digit inflation.
But just as inflation shows signs of control, the cedi has started losing ground. The currency, which gained strongly against the dollar earlier this year, is now under renewed pressure. Traders point to higher demand for dollars to cover imports and debt payments, combined with tighter foreign currency inflows. The exchange rate is hovering around GH₵12.25 to the dollar.
This creates a difficult policy choice for the Bank of Ghana. Inflation data suggests scope for further cuts to the policy rate, which currently stands at 25% after a 300-basis-point reduction in July. Businesses are pushing for cheaper credit to support investment and growth. Yet a weaker cedi risks reigniting price pressures through more expensive imports.
The central bank is therefore expected to proceed cautiously in its upcoming meetings. Analysts see two possible paths: hold the policy rate steady to defend the currency, or trim slightly if inflation continues to fall and reserves remain stable. Intervention in the foreign exchange market also remains on the table if depreciation accelerates.
Ghana’s progress on inflation is real. The risk is that a sliding currency undermines those gains. For the central bank, keeping prices stable while protecting the cedi may prove to be the hardest balancing act yet.
