Tight Liquidity, Sticky Inflation: What It Means for Ghanaian Businesses in 2025
The Bank of Ghana (BoG) is stepping up its fight against inflation with a sharp tightening of liquidity in 2025. As of April, the central bank had absorbed a staggering GH¢79.8 billion in excess liquidity—a 76.6% increase over the GH¢45.1 billion recorded in the same period in 2024.
This aggressive stance reflects a commitment to reining in inflation, which remains stubbornly high, and to stabilizing the financial system in line with the country’s IMF-supported economic programme.
At JS Morlu Ghana, we closely monitor these developments to help our clients stay ahead of the curve. Here’s what’s happening—and what it means for your business.
Why the BoG Is Tightening Liquidity So Quickly
The BoG’s monetary tightening is primarily aimed at:
- Controlling inflationary expectations
- Reversing the liquidity surge from 2024
- Sterilizing excess funds in the banking sector
The move is part of a broader reset to anchor inflation expectations, reduce excess demand, and maintain economic stability. According to the March MPC statement:
“The need for a policy reset has become more compelling to re-anchor inflation expectations.”
This shift marks a departure from the more measured approach seen in 2024. In fact, nearly 60% of 2024’s total liquidity absorption was matched in just the first four months of 2025.
Key Policy Tools and Figures
The BoG has intensified its Open Market Operations (OMO) in 2025:
- GH¢15.5 billion absorbed in February
- GH¢21.6 billion absorbed in March
- GH¢33.3 billion absorbed in April – a record monthly high
New tools introduced include:
- A 273-day sterilisation bill to absorb long-term liquidity
- A reviewed cash reserve ratio framework to enhance monetary transmission
Despite these actions, short-term Treasury yields have softened slightly, indicating investor confidence in the central bank’s approach.
Inflation: Falling, But Still a Concern
There are encouraging signs:
- April 2025 inflation: 21.2% (down from 22.4% in March)
- April 2024 inflation: 41.2%
This decline is driven by:
- Falling food prices
- Currency appreciation
- Base effects
However, core inflation remains elevated, and month-on-month inflation rose to 0.8%, signaling that underlying pressures persist.
In response, the BoG raised the Monetary Policy Rate to 28% in March, the first increase since 2023.
The Cedi Is Strengthening—Good News for Importers and Investors
A notable outcome of BoG’s tightening measures is the appreciation of the cedi:
- +10.5% year-to-date
- Strengthened from GH¢14.71/USD (Dec 2024) to GH¢13.31/USD (May 2025)
Weekly performance (as of May 16, 2025):
- +2.26% vs. USD
- +3.50% vs. GBP
- +3.68% vs. EUR
Contributing factors include:
- Improved FX supply through gold-for-reserve and cocoa loan inflows
- Positive sentiment due to fiscal discipline and structural reforms
JS Morlu Ghana’s Perspective: What This Means for Your Business
At JS Morlu Ghana, we recommend that businesses respond proactively to these macroeconomic changes. Here’s how:
✅ Reassess Borrowing Costs
Interest rates may rise further—review loan structures and debt servicing plans.
✅Hedge Currency Risk
If you import or export, consider strategies to minimize FX exposure as the cedi strengthens.
✅Review Cash Flow Management
Liquidity tightening could affect access to capital. Optimize working capital and review cash reserves.
✅Monitor Price-Sensitive Inputs
Inflation may still affect key inputs—renegotiate contracts or find substitutes where feasible.
✅Stay Agile in Planning
Budget assumptions may need adjustment. Build flexible models that can adapt to interest rate or exchange rate changes.
Stay Ahead with JS Morlu Ghana
The macroeconomic outlook is evolving quickly. Smart businesses are those that adapt early. At JS Morlu Ghana, we provide:
- Business advisory and financial planning
- Tax consulting
- Forecasting and scenario analysis
- Support with government and central bank policy navigation
We help you turn policy shifts into opportunities.