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The Bank of Ghana has lowered its monetary policy rate by 200 basis points, reducing it from 29% to 27%.
Dr. Ernest Addison, the Chairman of the Monetary Policy Committee (MPC) and Governor of the Bank of Ghana (BoG), announced that the decision was driven by the relative stability of the cedi, a downward trend in inflation, improved macroeconomic conditions, and strong fiscal policy implementation.
He highlighted the significant progress in the Central Bank’s reserves and fiscal stability.
“Fiscal policy has been robust, providing growth support, while tight monetary conditions have effectively contributed to the disinflation process,” Dr. Addison noted.
He further explained that headline inflation had decreased consistently over the past five months, falling by 5.4 percentage points since the first quarter. Core inflation also declined sharply, reducing by 6.9 percentage points during the same period.
“These trends indicate that the disinflation process is progressing well. Current forecasts suggest that inflation will continue to decline, potentially reaching the target range of 13-17% for the year. We expect inflation to further stabilize within the medium-term target of 6-10% by the end of 2025, barring any unexpected shocks. The committee currently assesses the risks to inflation as balanced,” Dr. Addison said.
Based on these factors, the MPC decided to cut the policy rate to 27%.
Dr. Addison shared these updates during a press briefing on Friday, September 27, 2024, following the 120th Monetary Policy Committee meeting.
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