IC Insights, a leading research firm, has stated that the Bank of Ghana’s latest policy rate hold confirms its longstanding view that inflation is set to commence an upward trend above 6.0%.

However, it pointed out that the continued fiscal discipline, relative exchange rate stability, and lower Value Added Tax (VAT) rate will cap inflation below 10.0% by the end of 2026, underscoring the rate-hold decision.

The Bank of Ghana’s Monetary Policy Committee (MPC) voted by a majority decision to leave the policy rate unchanged at 14.0% during its May 2026 meeting, being the first rate-hold decision in exactly a year.

According to IC Insights, the decision aligns with its call for a rate hold at this MPC meeting, which it expressed in its April 2026 inflation note.

“We opined that although inflation is firmly anchored, upside risks are emerging and the authorities would seek to maintain sufficient policy headroom to accommodate future inflation shocks. This reasoning and the inflation outlook appeared visible in the MPC’s deliberation, justifying the decision to maintain the current stance of double-digit real policy rate”.

As expected, the potential spillovers from the ongoing Middle East war were a dominant theme at this month’s MPC meeting, and this reflected in the Committee’s press statement.

IC Insights said “We got the impression that the authorities’ view and expectation of the war is shifting from a short-lived conflict to a protracted crisis which will pose upside risk to near-term inflation. In his responses to questions, the Governor seemed to suggest a 24-month modelling for the war with crude oil prices above US$100 per barrel but probably capped at US$120 per barrel. The MPC also viewed the quarterly increases in utility tariff as an upside risk to inflation in the months ahead with further push from unfavourable base effect (which we expect to begin from the June 2026 CPI).”

It continued that underlying pressure remains anchored despite recent uptick in headline inflation. “Encouragingly, we noticed a 20bps [basis points] decline in core inflation (CPI excluding energy & utilities) to 2.7% year-on-year in April 2026 despite the much-publicised uptick in the headline rate. This indicates continued low underlying price pressure which has been clouded by the energy price shocks, albeit with marginal pick-up in inflation expectation which requires cautious policy path”, it added.