Governor of the Bank of Ghana, Dr. Johnson Asiama, has called on commercial banks to adopt a measured and transparent approach in adjusting lending rates.
Speaking at the central bank’s maiden post-MPC meeting with CEOs of commercial banks in Accra, Dr. Asiama stressed the need for banks to be mindful of the impact of the rate increase on both businesses and households.
He urged financial institutions to maintain clear communication with their clients during this period of monetary tightening and to ensure that viable businesses are not priced out of access to credit.
While the policy tightening will affect funding costs and credit pricing in the near term, the financial system is well-positioned to absorb these effects. We therefore urge banks to exercise prudence in adjusting lending rates and maintain transparent communication with clients,” he said.
Acknowledging the impact the increase will have on businesses and households he urged the banks to support struggling sectors with targeted financial support.
The policy rate increase also strengthens external buffers, supports the cedi, and signals our commitment to macroeconomic stability at a time of heightened global uncertainty. However, we also recognize that the policy rate hike will affect borrowing costs for businesses and households. Viable businesses should continue to receive support, and tailored solutions should be explored to mitigate the impact on the most vulnerable sectors,” he added.
This comes after the the Bank of Ghana, recently hiked the policy rate by 100 basis points to 28%, the first time since September 2024.
Dr. Asiama reiterated that the decision was “aimed at reinforcing the disinflation process, which, while underway, remains too gradual to secure lasting stability. The decline in headline inflation from 23.8 percent in December to 22.4 percent in March confirms that recent policy actions are having the intended effect. However, inflation expectations remain elevated, and core inflation is still above the medium-term target.”
Outlook and Concerns in the Banking Sector
Despite recent challenges, the Governor of the Bank of Ghana, Dr. Johnson Asiama, expressed cautious optimism about the state of the banking sector. He noted that, even in the absence of relief measures, the sector has shown sustained improvement, driven by gains in solvency, asset quality, liquidity, and profitability.
However, Dr. Asiama highlighted ongoing concerns regarding solvency issues in a few domestically controlled and state-owned banks, where recapitalization efforts remain unclear.
Addressing these capital shortfalls remains a top priority,” he stated. “We are working closely with the affected institutions to achieve sustainable capital levels, restore depositor confidence, and ensure full compliance with regulatory requirements.”
Introduction of New Framework to Boost Banking Sector Resilience
Dr. Johnson Asiama, also announced plans to enhance the central bank’s supervisory and crisis resolution tools.
Central to this initiative is the upcoming launch of a Resolvability Assessment Framework, designed to ensure that banks remain well-capitalized and are adequately prepared for distress scenarios—particularly in an increasingly interconnected financial landscape.
This framework he noted, draws on lessons from past bank resolutions and forms part of a broader strategy to bolster crisis preparedness.
To build true resilience, we must move decisively beyond traditional, reactive supervision toward a more forward-looking, risk-sensitive, and system-aware model,” the Governor stated.
Dr. Asiama also reaffirmed the Bank’s commitment to supporting the sector through effective policy, open dialogue, and collaboration, aiming to build a more inclusive and stable financial ecosystem that meets the needs of all Ghanaians.