Policy rate cut to 19% possible if inflation falls, cedi remains stable – Analyst
Economic Analyst Emmanuel Boateng has stated that IC Research’s forecast of a Bank of Ghana (BoG) policy rate cut to 19 per cent is attainable, provided inflation continues to decline and the Cedi remains stable.
Speaking on Business Breakfast on Zed FM, Mr Boateng noted that the current inflation rate of 9.4 per cent, the lowest in four years, gives the Central Bank some breathing room.
He said that, should disinflation persist and the Cedi stay reasonably steady, a policy rate cut to 19 per cent by year-end is possible.
The economic analyst stressed the importance of fiscal discipline given Ghana’s ongoing IMF engagement, warning that any fiscal setbacks or external shocks could derail the projected rate reduction.
“The projections are optimistic but cautious. It is not out of reach,” he noted, urging the government to effectively manage key microeconomic stability indicators.
Mr Boateng explained that IC Research’s outlook depends on continued disinflation, Cedi stability, and a strong reserves position supported by favourable commodity prices.
This aligns with the Bank of Ghana’s forecast, although the central bank remains cautious on the timing of the rate cut.
“Key factors include sustained disinflation, a solid reserve position, and relative currency stability, all classical conditions for monetary easing,” Mr Boateng said.
He added: “While the Bank of Ghana has not issued an official statement, it recognises improving economic conditions and shares a directionally aligned, though conservative, stance with IC Research on the rate cut timing.”
IC Research recently projected that the policy rate could be trimmed to 19 per cent by the end of 2025 if inflation continues to fall and the Cedi remains stable.
The latest data show that inflation has declined to 9.4 per cent, its lowest level in four years, giving the Bank of Ghana some room to manoeuvre.
Sustained disinflation, steady currency performance and a solid reserve position, bolstered by favourable commodity prices, are seen as the main conditions for a potential rate cut.
