Ghana’s inflation slows again, fanning hopes for a rate cut

Ghana’s inflation rate cooled for the fifth straight month in December, raising hopes that the central bank will consider easing monetary policy for the first time since 2021.

The consumer price index rose by 23.2% last month from a year earlier after a 26.4% gain in November, government statistician Samuel Kobina Annim said in the capital, Accra, on Wednesday. The median estimate of three economists surveyed by Bloomberg was for price pressures to ease to 24.2%.

Prices rose 1.2% in the month, after a 1.5% increase in November. The annual rate of food inflation eased to 28.7% and the non-food inflation rate slowed to 18.7%, Annim said.

Ghana’s eurobonds maturing in 2026 gained 1.03% as at 10.52 a.m. in Accra to the highest level since Dec. 29.

The Bank of Ghana has held its benchmark policy rate at a record high of 30% since July last year, pausing after a cumulative 16.5 percentage points of tightening since November 2021. Policymakers had forecast inflation to end the year at 29%, down from a 54.1% peak in December 2022.

The central bank’s monetary policy committee will announce the results of its next meeting on Jan. 29.

“There’ll be considerable pressure on the MPC to begin to ease the policy rate,” said Godfred Bokpin, a finance professor at the University of Ghana. “The optimal thing is to signal the easing of risk in the economy in line with the turnaround story.”