Interest rate cut likely as Ghana's inflation slows to 28-month low

BREAKING NEWSAugust 14, 2024 at 1:10 PM UTC

TLDR

Ghana's annual inflation rate dropped to a 28-month low of 20.9% in July, showing the slowest increase in prices since March 2022.
The decline in inflation is a positive development for the Bank of Ghana's inflation control efforts, with the potential for monetary policy easing later in the year.
Despite previous interest rate cuts, policymakers have maintained the key rate at 29% due to concerns about the weak local currency and its inflationary effects.

Ghana’s annual inflation slowed to a 28-month low in July, easing to 20.9% from 22.8% in June, marking the slowest pace of price increases since March 2022.

This decline is a positive sign for the Bank of Ghana's efforts to control inflation, which has remained above the central bank's target range of 10% for over three years. The slowdown may create room for further monetary policy easing later this year.

Earlier, policymakers had surprised markets with an interest-rate cut in January, but since then, they have kept the key rate steady at 29%, given concerns over the weak local currency and its potential impact on inflation.

Key Takeaways

At the Bank of Ghana’s July 26 monetary policy committee meeting, Governor Ernest Addison highlighted concerns over exchange-rate pressures, rising utility tariffs, and fuel prices, noting that these factors have contributed to a "slightly elevated inflation profile" for the year. Despite these challenges, market sentiment towards Ghana is improving, largely due to ongoing economic reforms and the anticipated continuation of loan disbursements under a $3 billion program with the International Monetary Fund. These developments are expected to bolster confidence in the nation’s economic outlook.

Ghana

Economy

Interest Rates

Inflation

West Africa

Finance

Consumer Prices

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