Ghana Inflation Slows to 28-Month Low to 20.9%, Opening Way for Rate Cut
Ghana’s annual inflation slowed to 28-month low in July, a positive development in the central bank’s fight against price growth that may create space for further monetary policy easing this year.
Consumer prices rose 20.9%, their slowest pace since March 2022, compared with 22.8% in June, Government Statistician Samuel Kobina Annim told reporters Wednesday in the capital, Accra. The median of four economists’ estimates in a Bloomberg survey was 21.5%.
While annual inflation has topped the 10% ceiling of the Bank of Ghana’s target range for more than three years, policymakers surprised with an interest-rate cut in January. They have since kept the key rate unchanged at 29% after a weak local currency clouded the outlook for consumer-price growth.
Governor Ernest Addison warned at the Bank of Ghana’s July 26 monetary policy committee meeting that exchange-rate pressures and increases in utility tariffs and fuel prices have “resulted in a slightly elevated inflation profile for the year”.
However, market sentiment toward the nation is improving due to ongoing reforms and expectations of further loan disbursements as part of a $3 billion program with the International Monetary Fund.
If inflation continues to slow in August and the US Federal Reserve cuts its key rate in September, Ghana’s central bank may become “more confident that it can restart its monetary easing without adding too much pressure on the cedi,” Mark Bohlund, a senior credit research analyst at REDD Intelligence, said before the release.
The Bank of Ghana is due to announce its next interest-rate decision on Sept. 30.
