The growing debate around the cost of monetary policy has placed the Bank of Ghana under renewed scrutiny, but analysts argue that such discussions risk overlooking a fundamental truth: central banks are not designed to make profits, but to stabilise economies.
In an analysis by Richmond Eduku, the costs associated with central bank interventions are framed as necessary investments in economic stability, much like government spending on infrastructure.
He notes that the success of monetary policy should be judged not by financial returns but by its ability to control inflation, stabilise the currency, and restore confidence.
As Christine Lagarde once stated, “Our job is not to make profits, but to maintain price stability,” a position that underscores the broader mandate of central banking.
Ghana’s Economic Turnaround
Ghana’s recent macroeconomic recovery illustrates this principle. Following a period marked by high inflation and currency volatility, key indicators have improved significantly.
Inflation, which stood at 23.8 percent at the end of 2024, declined sharply to 5.4 percent by December 2025, with further moderation into early 2026.
At the same time, lending rates eased from above 30 percent to around 20 percent, while the policy rate dropped from 29 percent to about 14 percent.
The cedi also stabilised, appreciating from nearly GH¢17 to the dollar at its peak to about GH¢10–11, easing pressure on import costs.
These improvements, analysts say, translate directly into relief for households and businesses, lowering the cost of living and improving planning certainty.
Achieving these outcomes, however, has come at a financial cost. Through Open Market Operations, the central bank absorbed excess liquidity by issuing short-term instruments and paying interest, with costs rising from GH¢8.6 billion in 2024 to about GH¢16.7 billion in 2025.
While these figures may appear as losses on paper, they represent what Eduku describes as “the cost of stabilisation.” Without such interventions, excess liquidity could have driven inflation higher, placing a heavier burden on consumers.
Exchange Rate and Accounting Effects
The strengthening of the cedi has also created accounting implications. As the local currency appreciates, the value of foreign reserves declines in cedi terms, producing what are essentially valuation adjustments rather than real losses.
Similarly, Ghana’s gold reserve accumulation strategy, which involves purchasing gold locally, strengthens external buffers but introduces accounting gaps due to exchange rate differences in valuation. Despite this, the underlying assets remain intact.
The central bank has also borne part of the fiscal adjustment through the Domestic Debt Exchange Programme, which reduced its income from government securities.
This represents foregone earnings rather than direct losses, reflecting its role in supporting broader economic recovery efforts.
Economists often highlight this burden-sharing role. Milton Friedman famously argued that “inflation is taxation without legislation,” suggesting that unchecked inflation imposes hidden costs on households. By reducing inflation, the central bank effectively shields citizens from this burden.
Global Perspective and Long-Term Impact
This experience is not unique to Ghana. Institutions such as the European Central Bank and the Bank of England have also reported significant accounting costs tied to stabilisation policies in recent years.
Ultimately, analysts argue that these costs should be viewed in the same way as public investment. Just as infrastructure spending supports long-term growth, monetary policy interventions create the conditions for economic stability and prosperity.
The real measure of success, Eduku concludes, is not profitability but whether economic conditions improve for citizens, and on that front, Ghana’s recent progress suggests that the cost of stabilisation is already yielding tangible benefits.
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