Bank of Ghana holds fire in January

BOG’s continues pause in its loosening cycle, meeting expectations: At its 22–24 January meeting, the Bank of Ghana (BOG) kept its monetary policy rate unchanged at 27.00%, mirroring last November’s pause and matching market expectations.

Slow moderation in inflation and robust economic activity drive hold: The hold was motivated by a sluggish pace of disinflation in 2024; food prices have been stoked by dry weather affecting harvest yields. The BOG now expects inflation to return to its 6.0–10.0% medium-term target three months later than originally estimated, in Q2 2026; moreover, this projection depends on fiscal consolidation, according to the Bank, which isn’t guaranteed as the 2025 budget is not yet published. Additionally, economic growth has been stronger than projected, with GDP expanding 6.3% year on year in Q1–Q3 2024 and with available data hinting at another strong increase in Q4. Moreover, the external sector position improved in 2024, with the country rebuilding reserve buffers at a faster-than-expected pace. This supported the stability of the cedi, which has recovered slightly from last year’s record lows.

Policy easing to resume later this year: The BOG did not provide specific forward guidance on what it will do with interest rates in the future. The Bank warned that key risks to the economic outlook will need close monitoring, such as shortfalls in energy supply that could drive up imports and hurt the value of the cedi. At the next meeting is set for 25–28 March—with the decision to be announced three days later—most of our panelists see the BOG staying put once again; the rest see room for the Bank to resume lowering rates. Overall in 2025, our panelists see 300–900 basis points worth of reductions.

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