Ghana joins Nigeria in holding rates again as US-Iran war clouds inflation outlook

Ghana’s central bank left its benchmark interest rate unchanged at 14 percent on Wednesday, extending a pause in its monetary easing cycle as renewed conflict in the Middle East heightens inflation risks and complicates the country’s path towards price stability.

The decision was in line with the expectations of bankers, economists and analysts, who had widely forecast that the Bank of Ghana would keep borrowing costs unchanged amid growing uncertainty over global energy prices.

The move follows a similar decision by Nigeria’s Central Bank on Tuesday, with Africa’s two largest West African economies opting to keep monetary policy tight as the conflict involving the United States, Israel and Iran threatens to fuel imported inflation across the continent.

Governor Johnson Asiama said the conflict and the resulting disruption to global trade routes had reignited volatility in energy markets, creating fresh upside risks to inflation despite Ghana’s improving macroeconomic outlook.

“Inflation has edged closer to the lower bound of the Bank of Ghana’s 6 to 10 percent target band, while inflation expectations and core inflation measures have also increased,” Asiama said.

Data from the country’s statistical service shows that consumer inflation accelerated to a six-month high of 5.3 percent in June from 3.7 percent in May, interrupting months of steady moderation. Although inflation remains within the central bank’s target range, policymakers are increasingly concerned that higher global oil prices could reverse recent gains.

Renewed hostilities in the Middle East have unsettled global energy markets, with Brent crude climbing towards $100 a barrel, raising the prospect of higher fuel import costs for many African economies. For net oil-importing countries such as Ghana, rising crude prices typically feed into transport, electricity and food costs, increasing pressure on households and businesses.

The decision marks the country’s second consecutive pause after five straight rate cuts, signalling a shift from supporting growth towards safeguarding price stability. Last year, Africa’s top gold producer emerged as the continent’s most aggressive monetary policy easer, cutting its benchmark rate by a cumulative 1,000 basis points as inflation retreated from multi-year highs.

Ghana now joins a growing group of African central banks—including Nigeria, Morocco, Tunisia, Uganda, Kenya, Botswana, Egypt and Mozambique—that have opted to leave borrowing costs unchanged while assessing the impact of earlier policy decisions and mounting geopolitical risks.

Elsewhere, however, the monetary policy cycle is shifting in the opposite direction. Ethiopia, Namibia, Rwanda and Tanzania have resumed raising interest rates as inflationary pressures re-emerge, while South Africa raised its repo rate by 25 basis points to seven percent in May, its first increase since 2023.

Investors are now awaiting the South African Reserve Bank’s policy decision on Thursday, where policymakers are widely expected to deliver another rate hike after inflation accelerated to five percent in June, its highest level in two years.

The increase would reinforce expectations that Africa’s largest economies are once again prioritising price stability over growth as rising oil prices, geopolitical tensions and currency pressures threaten to reignite inflation across the continent.