Fitch Solutions has revised to end-2023 policy rate forecast to 30.50%, from 29.00% previously.

This follows the increase in the policy rate to 29.5% by the Bank of Ghana.

Fitch said “a more hawkish-than-expected Bank of Ghana has led us to revise up our end-2023 policy rate forecast to 30.50%, from 29.00% previously.”

“Indeed, Ghana’s central bank hiked by 150 basis points to 29.50% on March 27, above Bloomberg consensus expectations”.

The Bank of Ghana has now hiked by a cumulative 1,500 basis points since November 2021, making it one of the most hawkish central banks globally.

The Monetary Policy Committee (MPC) stated that “it is important that the monetary policy stance be tuned further to re-anchor inflation expectations”, suggesting that additional tightening is likely.

Furthermore, it said “we anticipate that the BoG will follow up the March [2023] rate hike with a 100 basis points increase at its May [2023] MPC meeting as inflation remains high. 

Inflation fell to 52.8% year-on-year in February 2023, from 54.1% in December, but it remains five times higher than the 10.0% ceiling of the BoG’s target range.

In addition, Fitch Solution said the signs of economic weakness will become increasingly evident in the data, discouraging the MPC from hiking further.