The Governor of the Bank of Ghana, Dr. Johnson Asiama, recently talked about why people in Ghana might not be seeing lower prices in stores, even though the Cedi (the local currency) is getting stronger.
Dr. Asiama explained that many shop owners buy their products when the Cedi is worth less compared to other currencies. So, even if the Cedi gets stronger, it takes time for prices to change in stores. He reassured everyone that prices will eventually go down, especially if there’s competition among sellers.
This conversation happened after the Cedi improved against the US Dollar.
When asked about when people might see price changes, Dr. Asiama said during a press conference that it’s normal for prices to take a while to adjust. He said, “Some people stock their goods at a higher exchange rate, so it takes time for you to see that adjustment.” But he promised that if there’s competition, prices will go down soon.
Another question was about whether the Cedi's strength would last. Dr. Asiama explained that while it’s great to see the Cedi getting stronger, it’s important to make sure it doesn’t keep getting stronger too quickly. He mentioned that the Monetary Policy Committee (MPC) had discussions about this and believes the current situation is good for Ghana’s economy.
He said, “The appreciation is largely driven by the markets, not by the central bank using its reserves.” This means that the Cedi’s strength is coming from how the economy is doing, not just from the bank’s actions.
Before answering questions, Dr. Asiama shared some positive news. He said that inflation (which is when prices go up) has been going down for the first four months of the year. This is good because it means that the cost of living might not be rising as fast.
He also mentioned that Ghana’s economy is doing well, with a surplus of $2.1 billion in the first quarter of 2025. This surplus is mainly due to higher prices and more production of gold and cocoa, as well as money sent back home by people living abroad.
Dr. Asiama noted that the Cedi has been doing really well against other currencies. For example, it has gone up by 24.1% against the US Dollar and 16.2% against the British Pound. This is thanks to a mix of smart money management and good market feelings.
Looking ahead, Dr. Asiama said that inflation is expected to keep going down, which is good news. He mentioned that they are aiming for a specific target for inflation and that they will keep working hard to reach it. Because of this, the MPC decided to keep the policy rate at 28%.
In summary, while prices might not be dropping right away, there are signs that things are improving in Ghana’s economy, and we can expect better news soon!