In an effort to bolster economic recovery and maintain inflationary stability, the Bank of Ghana has reduced its benchmark interest rate to 29%, the first reduction since 2021.
The decision comes as annual inflation softened to a 21-month low of 23.2% in December, down from 26.4% in the previous month.
Governor Ernest Addison, addressing reporters in Accra, emphasized that the bank anticipates further disinflation, projecting headline inflation to ease to approximately 13% to 17% by the end of 2024.
However, he also underscored the presence of upside risks to the inflation outlook, highlighting the imperative for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process.
The reduction in the key rate is a pivotal step in balancing the need for economic stimulus with the imperative of inflation management.
While acknowledging the continued challenge of high inflation rates, Governor Addison stressed the importance of considering the nation’s economic growth prospects.
The move is also indicative of Ghana’s commitment to navigating the delicate balance between addressing inflationary pressures and fostering economic expansion.
The decision by the Bank of Ghana reflects its proactive approach in response to evolving economic dynamics, signaling a commitment to supporting growth while maintaining price stability.
Analysts anticipate further easing measures in the coming months, with projections suggesting a potential reduction of another 500 basis points to reach 24.0% by the year’s end.
The reduction in the key rate is expected to have reverberating effects across various sectors, offering relief to businesses and consumers alike while bolstering investor confidence in Ghana’s economic resilience amidst global uncertainties.
