Fitch Solutions has indicated that the Bank of Ghana will keep the policy rate on hold at 30.5% in 2024. This is coming after the Central Bank adjusted its key lending rate to banks at 29.5% last week.

Fitch Solutions said while inflation will moderate further in 2024, it is unlikely the Bank of Ghana will start easing monetary policy.

“Turning to 2024, we believe that the BoG will keep the policy rate on hold at 30.50%. While inflation will moderate further – we forecast inflation will average 16.0% in 2024 – we believe that it is unlikely that the BoG will start easing monetary policy”.

Indeed, under an expected International Monetary Fund programme, the Central Bank will likely be encouraged to keep the policy rate elevated to “strengthen its monetary policy framework”, it explained.

Furthermore, Fitch Solutions said the return of positive real interest rates will result in more capital inflows, mitigating risks to Ghana’s external position. 

It forecast inflation to average 37.6% in 2023, higher than the 31.5% recorded in 2022. 

As such, it believes that policymakers will remain focused on controlling price growth in the near term as they aim for a more substantial disinflation trajectory before concluding the tightening cycle.

BoG increases policy rate to 29.5%; loans to remain expensive

The Bank of Ghana increased its policy rate by 150 basis points to 29.5% on Mondat March 27, 2023, to help check the high inflation and downside risks to the economy.

This meant the cost of credit will continue to remain high, affecting household spending and private sector growth.

Average lending rates shot up marginally to 36.64% in February 2023, from 35.58% recorded in December 2022. This is equivalent to 3.02% interest rate on loans per month.