Fitch Solutions has projected that the Bank of Ghana (BoG) will initiate a significant monetary easing cycle, resulting in a cumulative reduction of the policy rate by 800 basis points to 22.00% by the end of 2024.

The UK-based firm attributes this anticipated move to a substantial moderation of headline inflation in the country.

“With inflation moderating substantially through 2024, we anticipate that the BoG will embark upon a sizeable monetary easing cycle, cutting the policy rate by a cumulative 800bps to 22.00% by year-end.”

Fitch Solutions also noted that there is typically a 12-month time lag for interest rate adjustments to impact the real economy, owing to delays in monetary transmission mechanisms.

Consequently, the firm believes that the Bank of Ghana's dovish monetary policy stance is unlikely to lead to a sudden increase in real loan growth, a factor that has remained in contractionary territory from January to August 2023.

Since 2021, the Bank of Ghana has raised the benchmark policy rate by 1,150 basis points to 30.00%, thereby restricting access to corporate credit.

Additionally, the Monetary Policy Committee of the Bank of Ghana is scheduled to conduct its 116th regular meetings from Tuesday, January 23 to Friday, January 26, during which it will assess developments in the economy.