Ghana’s central bank cut its key interest rate to 27% from 29%, a larger-than-expected reduction, as inflation in the country slows and is projected to decrease further.
The decision, announced by Governor Ernest Addison, surprised economists and marks the steepest cut since March 2018. None of the economists polled by Bloomberg had anticipated such a significant decrease.
Inflation in Ghana has slowed for five consecutive months, falling to 20.4% in August from 25.8% in March. The central bank expects inflation to continue easing toward its year-end target of 13% to 17%, and potentially reach 6% to 10% by the end of 2025, barring unforeseen shocks.
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This rate cut comes ahead of Ghana’s presidential elections in December, where Vice President Mahamudu Bawumia faces strong opposition from John Dramani Mahama amid public frustration over the economy.
Ghana’s economy grew 6.9% in the second quarter of 2024, its strongest performance in five years, as the country emerges from debt restructuring following its 2022 default and a $3 billion IMF bailout.
