It pointed out that while it expects the disinflation trend to continue in the second half of 2024, the inflation profile remains elevated.

“These prevailing upside pressures will continue to moderate the decline in inflation and we envisage possible reversals in the inflation trend in August and later in Q4 [quarter 4] 2024. While the cedi appears to have stabilized broadly against the major trading currencies following the raft of positive news since June, the lagged impact and the second-round effects of the prevailing inflationary pressures could linger, moderating the pace of disinflation”, it said.

“Accounting for the prevalent upside risks to inflation in the near term, our revised model shows that inflation could struggle to close sub-20% even if the exchange rate pressures remain muted in 2H2024 [second half 2024]. Potential election-related expenditure in the lead-up to the December 2024 general elections could also increase GHS [Ghana cedi] liquidity in the economy and fuel demand-side inflationary pressures if not adequately mopped up”, it added.

Inflation slowed down in June 2024 printing at 22.8%.

However, GCB Capital said it expects increased cedi liquidity in the system as the election pulse heats up in the second half of 2024, which could further fuel inflationary pressures.

Therefore, it maintains a remote possibility of a marginal rate cut in July 2024 but more firmly in the September 2024 and November 2024 policy windows.

It concluded expecting nominal interest rates to be sticky downwards on the outlook.