Ghana cuts interest rates to 15.5% as inflation falls
In a Wednesday announcement, Ghana's central bank slashed the main interest rate to 15.50%, a level that is below expectations of most economists and lower than its lowest in four years. The decision was made because inflation has remained under control. Bank of Ghana economists had predicted that the rate would be lowered by 200 basis points to 16% following a 300 bps reduction in July, and 350 bps in September and November.
Since the beginning of its current easing cycle in July last year, the bank has lowered its main lending rates by a total of 12.5 percentage points.
Bank of Ghana Governor Johnson Asiama said at a press conference that the Monetary Policy Committee meeting of the bank had unanimously decided to acknowledge the macroeconomic condition of the West African nation, which produces gold and cocoa.
He said that "this was supported by the tight monetary policies, fiscal consolidation, and the significant building up of reserves." He added that the consumer inflation rate for the first half of the year is expected to broadly align with the bank's mid-term target range while the growth rate in 2026 was expected remain strong. Consumer inflation fell'sharply' from 54.1% at a record in December of 2022, to 5.4% by December of 2025. The Bank of Ghana targets an inflation rate of?8% with a 2 percentage point tolerance.
Asiama stated that it is still too early to revise the inflation target of the bank.
Expecting MORE Easing
Capital Economics analyst David Omojomolo stated that the 'bank was dovish, as it wanted to support the growth against the backdrop of low prices.
Omojomolo stated that he was confident in his forecast of at least another 500 basis points of reductions to be achieved over the remainder of this year.
Ghana is recovering from the worst economic crisis it has experienced in decades. It is expected to finish a three-year IMF programme by August. (Reporting and writing by Emmanuel Bruce, Christian Akorlie, and Bate Felix.
(source: Reuters)
