The Governor of the Bank of Ghana, Johnson Pandit Asiamah, has defended the decision by the Monetary Policy Committee (MPC) to maintain the policy rate at 14 percent, citing growing uncertainties arising from the ongoing Middle East conflict.

Speaking at the 130th MPC press briefing in Accra on Wednesday, Dr Asiamah described the geopolitical tensions in the Middle East as the “elephant in the room” influencing the central bank’s cautious approach.

According to him, although domestic economic indicators suggest there may be room for further monetary policy easing, external risks linked to the conflict could undermine Ghana’s inflation outlook.

“The committee evaluated other forms of risks. The elephant in the room here is the Middle East crisis,” he said.

“Up to this time, one is not sure whether it is temporary or whether it is going to be long-lasting. If we assume that it will be a longer-lasting one, then you can imagine the impact on inflation expectations and the so-called second-round effects,” he added.

Dr Asiamah explained that the MPC weighed both improving local economic conditions and potential external shocks before deciding to pause further rate cuts.

“That is why, in the wisdom of the committee, it was decided to pause and evaluate all incoming data so that at the next MPC round, the committee would take an appropriate decision,” he stated.

The Governor also addressed concerns over the slow reduction in lending rates by commercial banks despite declining benchmark interest rates.

According to him, banks were adjusting cautiously to the lower interest rate environment while ensuring that credit risks were properly managed.

“When interest rates are falling, it may take a while. You don’t just rush into giving loans. There has to be adequate bankable projects and you don’t compromise your credit appraisal standards,” he said.

He expressed confidence that lending rates would gradually decline if the low-interest-rate regime is sustained.

Dr Asiamah further defended the MPC’s decision to revise the dynamic cash reserve ratio to a uniform 20 percent reserve requirement in domestic currency, effective June 4, 2026.

He said the move followed a review of earlier liquidity management measures introduced about a year ago and would complement the central bank’s open market operations.

“In the wisdom of the committee, we think this will go a long way to complement our open market operations,” he noted.

The Governor disclosed that the central bank would meet Chief Executive Officers of commercial banks next week to discuss the implications of the new policy measures.

On the recent oversubscription of Treasury bill auctions, Dr Asiamah declined to comment directly on government borrowing strategies, insisting that such matters were better addressed by the Ministry of Finance.

“You know it’s a market; it’s an auction. The banks and treasuries make those decisions based on market conditions and what they forecast going forward,” he said.

Touching on the cedi’s recent depreciation, Dr Asiamah stressed that Ghana operates a managed floating exchange rate regime rather than a fixed exchange rate system.

“The cedi is expected to move. It can depreciate or appreciate. Our concern is to avoid excessive volatility,” he stated.

He attributed recent exchange rate pressures mainly to increased foreign exchange demand caused by rising crude oil prices and dividend repatriation by multinational companies during the April-May reporting period.

“The same volume of crude oil is costing about twice more by way of foreign exchange,” he explained.

Despite the pressures, the Governor assured the public that the central bank had sufficient reserves to stabilise the market if necessary.

“The good part of it all is that we have the buffers. We are building them on a daily basis,” he stressed.

He disclosed that Ghana’s Net International Reserves had increased from US$10.9 billion in April to US$12.43 billion currently.

“We should be able to do what we have to do. What we will ensure is that we won’t see a return to the kind of volatility we saw in previous years,” he assured.

Dr Asiamah also revealed that the central bank was developing a digital credit framework that would allow individuals and businesses to access regulated mobile-based loans.

“So very soon, no matter which sector you are involved in, you can just raise a loan on your mobile phone,” he disclosed.

In addition, he announced that Ghana could witness the launch of its first non-interest banking institution before the end of the year, adding that the regulatory framework was being developed in line with international best practices.

On non-performing loans (NPLs), the Governor said the central bank had directed commercial banks to reduce bad loans by the end of 2026.

He noted that while the gross NPL ratio stood at 18 percent, the net figure after provisions was about eight percent.

“We don’t just erase fully provisioned loans because of moral hazard,” he explained.

Regarding concerns over disruptions to Ghana’s gold exports linked to the Middle East crisis, Dr Asiamah said temporary challenges affecting shipments to the United Arab Emirates had been resolved through alternative arrangements.

“The Gold Board has been able to find a way around it,” he said. “Shipments are ongoing.”