Bank of Ghana Faces Strain from High Interest Rates and Weak Cedi

The Bank of Ghana is facing mounting financial strain. High interest rates and a weakening Ghanaian cedi are significant factors. This is according to a new analysis by the Centre for Economic Research and Policy Analysis (CERPA).

CERPA’s report points to the central bank’s use of tight monetary policy. This involves high interest rates and operations to manage money supply. These actions are meant to curb inflation and stabilize the cedi. However, they come with substantial financial costs for the Bank of Ghana. These costs are now clearly visible on its balance sheet. The analysis, released on May 7, 2026, highlights the growing concerns about the central bank's financial health.

Ghana has been working to control inflation and maintain currency stability. High interest rates increase the cost of removing excess money from the financial system. This process, known as sterilisation, has become more expensive. The Ghanaian cedi has also depreciated. This means that foreign debts held by the Bank of Ghana are worth more in local currency. This leads to revaluation losses for the bank. The exchange rate volatility in 2025 likely worsened this situation for the central bank’s foreign currency reserves.

According to the CERPA report, these monetary policy tools are essential for economic stability. However, they create a difficult trade-off. While necessary, these measures deepen the central bank’s financial strain. CERPA cautions that this trade-off must be managed carefully. It is important to avoid damaging confidence in the Bank of Ghana’s monetary policy actions. The report emphasizes price stability as the core mandate.

Beyond its core functions, CERPA also raised concerns about other initiatives. These include programs like Gold-for-Oil and Gold-for-Reserves. These programs aim to stabilize fuel prices and foreign exchange. CERPA argues they fall outside the Bank of Ghana's main responsibilities. The think tank recommends that the government take over these non-core functions. This would allow the Bank of Ghana to focus solely on price stability. Continued involvement in these operations could further weaken its financial position.

The findings suggest a need for careful management of monetary policy. Policymakers must balance the immediate need for stability with the long-term financial health of the central bank. Future decisions on interest rates and currency management will be closely watched. The central bank's ability to manage these costs will be crucial for market confidence.