Central Bank resumes loosening cycle in September

Larger-than-expected cut: The Bank of Ghana (BOG) resumed the easing cycle that it began—and then quickly paused—in January at its meeting on 25–27 September, slashing the policy rate by 200 basis points to 27.00%. The size of the cut surprised most analysts, as a smaller 100 basis point had been priced in.

Inflation environment and outlook improves: The Bank cut aggressively as the notable easing in both headline and core inflation since Q1 has led it to conclude that price pressures will trend down toward its short-term 13.0–17.0% target, and toward its 6.0–10.0% medium-term target by end-2025. Additionally, the BOG assessed risks to the inflation outlook to be balanced—as opposed to skewed upwards as it did at its July meeting. Regarding activity, GDP growth surprised the BOG to the upside for a second consecutive quarter in Q2, and the Bank anticipated another robust economic performance in H2.

More cuts in store at November meeting: The Central Bank did not provide specific forward guidance, leaving its next steps open-ended. The majority of our panelists see 50–200 basis points of additional cuts at the BOG’s next and last meeting this year, which is scheduled for 20–22 November, with the decision to be announced three days later.

Panelist insight: EIU analysts said: “Given the sharper than previously estimated pace of rate cuts in September, we now expect the main policy rate to reach 25.5% by end-2024 and 22.5% by end-2025. The rate cut comes on the back of sustained disinflation over the third quarter of 2024.”

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