High interest rates and currency depreciation drive Bank of Ghana financial strain- CERPA report
The Centre for Economic Research and Policy Analysis (CERPA) says the Bank of Ghana's aggressive inflation fight and efforts to stabilise the cedi are contributing significantly to its mounting financial losses. The think tank says the central bank's reliance on tight monetary policy tools-such as high interest rates and liquidity management operations-has come with "substantial financial costs" that are now reflected in its worsening balance sheet. In its latest policy brief, CERPA noted that while these measures have helped in managing inflation and exchange rate pressures, they have also increased the Bank of Ghana's operational losses.
According to CERPA, the high-interest-rate environment has sharply increased the cost of sterilising excess liquidity in the financial system. The depreciation of the cedi is compounding the problem because a weaker currency increases the local value of the Bank of Ghana's foreign liabilities, leading to revaluation losses. CERPA explains that exchange rate volatility in 2025 likely worsened the central bank's external position. Beyond monetary policy operations, CERPA also raised concerns about quasi-fiscal interventions such as the Gold-for-Oil and Gold-for-Reserves programmes.
CERPA is urging a policy rethink, recommending that the government gradually assumes responsibility for such non-core functions. It further calls for the central bank to refocus strictly on its primary mandate of price stability, warning that continued exposure to non-traditional operations could further weaken its financial position.
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A new CERPA report indicates the Bank of Ghana's inflation fight and cedi stabilisation efforts are impacting its finances. The analysis hints at a difficult policy trade-off- but what could this mean for confidence in monetary policy?
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