Inflation will ease throughout 2024 averaging 18% in 2024, Fitch Solutions has predicted.
It insists the easing inflation will force the Bank of Ghana to cut the policy rate by 800 basis points this year.
It disclosed this in its January 2024 Sub Saharan Africa Quarterly Update.
This will be almost in line with the Bank of Ghana’s projection of 15%±2% by the end of 2024.
“Inflation has already dropped to 26% in November [2023], mostly due to statistically base effects. We project that inflation will continue to ease throughout 2024 ,averaging roughly 18%”, Mike Kruiniger, Senior Country Risk Analyst at Fitch Solutions, who led the West Africa discourse said.
“Base effects will continue to play an important role in Ghana’s disinflation story, but a strong exchange rate will also be key in driving down price growth”, he explained.
Mr. Kruiniger also said the easing inflation “Will allow the Bank of Ghana to more to a linear monetary policy stance. “So we believe the Central Bank will launch a monetary policy cycle by cutting the policy rate by a cumulative 800 basis points in 2024 reaching 22%”.
He also pointed out that it will take a long time for interest rates to fall significantly. “It will obviously take time for lower interest to filter through the real economy. But we anticipate that it will strongly lead to higher consumption growth in the latter half of 2024.