The Bank of Ghana has kept its benchmark interest rate unchanged at 27%, citing a mix of improving domestic economic activity and persistent inflationary pressures. The decision, announced by Governor Ernest Addison on Friday, aligns with the expectations of half of the economists polled by Bloomberg, while others had anticipated a rate cut.
Governor Addison stated that inflation is now projected to return to the target range of 6%-10% by the fourth quarter of 2025, later than the earlier forecast of the third quarter of 2025. Inflation accelerated to 22.1% in October, marking the second consecutive month of rising rates.
Factors contributing to the inflationary outlook include a strong US dollar, geopolitical tensions, and trade protectionism, which could drive up energy and food prices. However, the recent strengthening of Ghana’s cedi, backed by increased dollar sales and improved reserves, is expected to stabilize future price developments.
Ghana’s gross international reserves rose slightly to $7.9 billion as of November 22, up from $7.8 billion in September. The International Monetary Fund is also expected to disburse $360 million to Ghana next month as part of its $3 billion bailout package agreed upon in May 2023.
The country’s economy has shown signs of recovery, growing 6.9% year-on-year in the second quarter and benefiting from a restructuring of its debt. Ghana’s eurobonds have also performed well, with the 2029 bond gaining value after the reorganization.
Governor Addison emphasized the importance of monitoring external risks and ensuring policy measures to sustain economic stability.