Rising Global Oil prices could shape bank of Ghana MPC decisions

The Bank of Ghana Monetary Policy Committee (MPC) is set to meet next week, from March 16 to March 18, to review key policy decisions, including the gradual easing of monetary policy following a prolonged period of disinflation.

Ghana’s steady decline in inflation now faces its first major external test in over a year, as surging global crude oil prices threaten to reverse the disinflationary trends that have helped ease consumer price pressures.

International oil prices have risen sharply in recent days, climbing more than 50 percent above levels recorded during the last domestic fuel pricing window, driven largely by geopolitical tensions in the Gulf region. The increase has raised concerns that transport costs—which have been a key contributor to recent disinflation—could start to rise again, complicating the MPC’s policy deliberations and upcoming interest-rate decisions.

Higher global oil prices are likely to feed through into transport fares and the broader consumer basket via increased distribution and logistics costs. Although Brent crude prices fell below US$90 late Monday from a recent high of US$119.50 following remarks by former US President Donald Trump suggesting a possible end to hostilities, sustained conflict could have long-term economic impacts on households.

UK Chancellor Rachel Reeves has also warned that Britain may face rising inflation due to the US-Iran conflict, underscoring how persistent energy price shocks could influence monetary policy decisions in Ghana.

Analysts note that policymakers may face fiscal trade-offs, with one possible response being the suspension of the GH¢1 fuel levy to soften the impact of rising international oil prices on domestic pump prices.

According to Apakan Securities, the recent moderation in inflation was largely driven by favourable base effects, which are now fading. Nevertheless, current inflation figures still support the case for a further policy rate cut. Earlier this year, the central bank reduced its policy rate by 250 basis points to 15.5 percent in response to improved macroeconomic conditions, anchored inflation expectations, and stronger external buffers.

High oil prices tend to have a pronounced effect on African economies that rely heavily on imported petroleum products. In Ghana, elevated crude prices typically translate into higher pump prices, driving up transportation and food distribution costs. The impact is often intensified by currency depreciation as larger fuel import bills increase demand for foreign exchange.

Authorities, however, say they have developed contingency measures to manage sustained oil price shocks. Dr Theophilus Acheampong said the economy is better positioned than in the past to respond to such external shocks.

Despite the risks, Ghana’s external position has strengthened over the past year. The country recorded a trade surplus of US$13.66 billion in 2025, up from US$9.88 billion in 2024, with export earnings reaching US$31.11 billion. Gold and cocoa exports drove much of the growth, with gold receipts more than doubling to US$20.98 billion and cocoa exports rising to US$3.86 billion, while oil exports declined by 32.3 percent to US$2.62 billion due to lower production volumes and weaker prices.

The Bank of Ghana emphasized that its monetary policy decisions will remain data-driven, even amid global commodity price volatility, as it works to stabilise the cedi, restore macroeconomic confidence, and strengthen external buffers.

Governor Dr. Ernest Addison Asiama, while briefing the Parliamentary Committee on Economy and Development on the Bank’s 2025 Monetary Policy Report, stated: “We remain mindful of risks in the global environment, including shifts in financial conditions and commodity price volatility. The Bank of Ghana will therefore continue to pursue a prudent, disciplined, and data-driven approach to monetary policy.”