Ghana Now Has World’s Highest Real Interest Rate of 14.3%
Ghana now holds the highest real policy rate globally at 14.3%, according to Fitch Solutions, reflecting a sharp drop in inflation amid a still-elevated benchmark interest rate. The West African nation’s headline inflation eased to 13.7% in June, while the Bank of Ghana (BoG) has maintained its monetary policy rate at 28% following a surprise 100bps hike in March.
Fitch, the research arm of Fitch Ratings, said the combination of slowing inflation, strong external buffers, and rising investor appetite for emerging market yields supports the case for imminent monetary easing.
“This continues to attract yield-seeking investors, particularly in the context of policy loosening in developed markets,” Fitch Solutions stated. “However, high gold prices and the accumulation of FX reserves suggest the BoG can begin cutting rates without triggering significant depreciation of the cedi.”
The firm maintained its base case that the central bank will initiate a policy easing cycle in September, with a cumulative 200 basis points in cuts expected by year-end, bringing the rate down to 26%. Nonetheless, it noted that the recent disinflationary trend increases the likelihood of an earlier rate cut.
“Given the sharp drop in inflation combined with robust reserves and muted global energy prices, we cannot rule out a rate cut in July,” Fitch said. Should that occur, it projects the policy rate could fall further, potentially ending the year between 24.00% and 25.00%.
Inflation Forecasts Revised Down
Fitch Solutions has also revised its inflation outlook downward in light of the latest data. Average inflation is now forecast at 15.4% in 2025 and 12.2% in 2026, down from previous projections of 17.1% and 13.9%, respectively.
June’s inflation print marked the steepest decline in over a year, falling from 18.4% in May to 13.7% – the lowest level since December 2021. The disinflation has been driven by the cedi’s sharp appreciation, up 50% against the US dollar during April and May, alongside falling global energy prices and easing supply-side pressures.
Of particular note, Ghana’s transport inflation turned negative in June, the first deflation in the category since 2009, amid lower fuel prices. Food inflation also continued to slow, aided by reduced import costs and favourable base effects.
External Buffers and Currency Outlook
The cedi’s recent strength has been bolstered by Ghana’s improving external position. Gross international reserves rose to $7.9 billion in April, equivalent to nearly four months of import cover. The reserve build-up has been supported by strong gold exports and favourable terms of trade, particularly amid heightened geopolitical risk and sustained central bank gold purchases globally.
Fitch Solutions expects the cedi to remain broadly stable through the second half of 2025, with policymakers maintaining their preference for a stronger exchange rate to contain imported inflation.
