Economy

IMF forecasts end-year Inflation rate of 8.7%

The International Monetary Fund is forecasting an end-year Inflation rate of 8.7% for Ghana.

That signals a likely ease in the cost of loans in the coming months.

This is consistent with Fitch Solutions 8.5% forecast and it comes at a time when the Monetary Policy Committee of the Bank of Ghana is holding its 98th meeting to review developments in the economy.

There are high expectations for a slight drop in lending rates for the next three months to help boost business and consumer spending.

Inflation which is an increase in the overall prices of goods and services in an economy is an important determinant in the cost of borrowing; and therefore the Bank of Ghana views it as crucial in pricing its base lending rate.

The expected lower inflation will boost the economy, hence encouraging savings, investments, and also deepen the nation’s international competitiveness.

It will also facilitate the cost of doing business for companies and as a result increase their profit margins.

An increase in the bottom lines of enterprises will also trigger expansion and job creation. Coupled with other economic indicators, a lower inflation will stimulate stock market activities and shore up share prices.

Inflation remained within the 9% to 10% bracket for the greater part of last year. According to the Ghana Statistical Service, Financial Services; Recreation, Sports, Culture and Education Services inflation remained very low in 2020.

Inflation hovered around 9-10% in 2020

Inflation remained within the 9 and 10% bracket for the greater part of last year.

According to the Ghana Statistical Service, Financial Services (1.7%); Recreation, Sports and Culture (0.2%) and Education Services (4.9%) inflation remained very low in 2020.

Inflation actually ended the year 2020 at a rate of 10.4%, a marginal increase over that of November 2020.