Fitch Solutions has stated that the Bank of Ghana will embark upon a sizeable monetary easing cycle, cutting the policy rate by a cumulative 800 basis points to 22.00% by the end of 2024.

According to the UK-based firm, it follows a substantial moderation of headline inflation.

“With inflation moderating substantially through 2024, we anticipate that the BoG will embark upon a sizeable monetary easing cycle, cutting the policy rate by a cumulative 800bps to 22.00% by year-end.”

Fitch Solutions added it usually takes about 12 months for interest rate adjustments to affect the real economy due to the lag in monetary transmission mechanisms.

As such, it believes that the Bank of Ghana’s dovish monetary policy stance is unlikely to result in a sharp increase in real loan growth – which has remained in contractionary territory over January to August 2023.

Since 2021, the Bank of Ghana has hiked the benchmark policy rate by 1,150 basis points to 30.00%. This has restricted access to corporate credit.

Meanwhile, the Monetary Policy Committee of the Bank of Ghana would hold its 116th regular meetings from Tuesday, January 23 to Friday, January 26 to review developments in the economy.