Policy Rate: Fitch Forecasts Additional 100bps Cut in Next BoG MPC Meeting
Fitch Solutions expects Ghana’s central bank to deliver a further 100 basis point reduction in its key interest rate next month, extending July’s sharp easing as inflation cools and the cedi strengthens.
The research arm of Fitch Ratings forecasts the Bank of Ghana’s Monetary Policy Committee will lower the benchmark policy rate to 24 per cent at its September meeting, citing a rapid deceleration in consumer prices.
Inflation slowed to 13.7 per cent year on year in June — its lowest since 2021 — and is projected to fall to between 10 and 12 per cent in August.
The cedi has appreciated by about 40 per cent against the US dollar over the past year, helping to damp imported price pressures in a country reliant on goods such as rice, petrol and vehicles. Weaker global oil prices have also contributed, with Brent crude down roughly 17 per cent year on year.
“We expect that the BoG will cut the policy rate by 100bps to 24.00% at its next Monetary Policy Committee (MPC) meeting in September. Inflation has already eased to 13.7% y-o-y in June – the lowest level since 2021 – and we anticipate a further decline in the coming months, supported by a stronger exchange rate. Indeed, the cedi is approximately 40% stronger against the US dollar than a year ago, which will continue to curb imported price pressures, particularly given Ghana’s heavy reliance on imported goods such as rice, petrol, and vehicles,” Fitch Solutions stated.
“Moreover, Brent crude prices are roughly 17% lower y-o-y, further reducing upside pressure on inflation. As a result, we forecast inflation to fall to around 10–12% in August (the final print before the September MPC meeting) providing the central bank with room to proceed with another rate cut,” it added.
The anticipated cut would follow July’s 300 basis point reduction to 25 per cent, which the central bank justified by pointing to stronger macroeconomic indicators, anchored inflation expectations, improved foreign reserves and rising investor confidence.
Governor Johnson Asiama signalled in July that further easing was likely if the disinflation trend persisted, hinting at the start of a rate-cutting cycle after more than two years of monetary tightening.
“We expect that the Bank of Ghana (BoG) will lower its benchmark interest rate to 23.00% by end-2025 and 20.00% by end-2026, following a steep 300-basis point (bp) cut to 25.00% in July. In its decision, the central bank noted that “macroeconomic conditions have significantly improved, inflation expectations are broadly anchored, external buffers have strengthened, and confidence in the economy is returning”. Governor Johnson Asiama also stated that the central bank would “likely reduce the policy rate further, should the disinflation trend continue”, suggesting that the large cut in July marks the start of an easing cycle,” the research agency of Fitch Ratings remarked..
