Fitch Expects BoG to Hold Policy Rate at 28% Amid Easing Inflation, Eyes Potential Cuts by September-GHANA

Fitch Solutions anticipates that the Bank of Ghana (BoG) will maintain its benchmark policy rate at 28% during an emergency Monetary Policy Committee (MPC) meeting scheduled for Thursday, July 17, 2025. This comes despite increasing signs of slowing inflation and growing calls for a more accommodative monetary stance. Fitch believes BoG will remain cautious, awaiting more consistent data before initiating any rate cuts.

The central bank previously surprised analysts in March with a 100-basis-point hike, citing persistent inflation risks. However, with inflation showing signs of decline, Fitch now projects that BoG could consider reducing rates as early as September, assuming macroeconomic conditions continue to strengthen. This move would mark a shift toward easing after a period of aggressive tightening.

Fitch estimates that if easing starts this July, the policy rate could drop to between 24% and 25% by the end of 2025. This would be below Fitch’s earlier projection of 26%, suggesting a more dovish outlook should economic conditions remain favorable. The narrowing gap between inflation and the policy rate has increased Ghana’s real interest rate, making it one of the highest among African frontier markets.

June saw headline inflation fall sharply to 13.7%, supporting the argument for potential rate cuts. This disinflation has been accompanied by relative stability in the Ghanaian Cedi, underpinned by improved external sector performance and confidence in monetary management. These trends reflect the effectiveness of prior tightening measures and improving investor sentiment.

Further boosting Ghana’s economic outlook is a surge in international reserves, which reached $7.9 billion in April—equivalent to nearly four months of import cover. This reserve increase is attributed to strong gold export revenues and soaring global gold prices, driven by geopolitical tensions and increased central bank demand for the precious metal. These factors provide a supportive backdrop for potential monetary easing later in the year.

Source: Citi newsroom