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Ghana Monetary Policy March 2023

Ghana: Central Bank stays put at 29.50% in May

At its meeting on 22 May, the Monetary Policy Committee of the Bank of Ghana (BoG) left its policy rate unchanged at 29.50%. This was the first meeting since July 2022 at which the BoG decided not to hike.

May’s decision was driven by declining inflation: Price pressures declined to 41.1% in April from 45.0% in March and 52.8% in February. Moreover, core inflation reached 41.7% in April from 44.6% in March. On the external side, the cedi appreciated slightly in April, further supporting the disinflationary process. Moreover, according to the BoG, the recent approval and arrival of the first tranche from the USD 3.0 billion IMF arrangement has reinforced macroeconomic stability and helped restore investor confidence.

The Bank did not outline clear forward guidance in its communiqué. It reiterated its commitment to re-anchoring inflation expectations to the medium-term target range of 6.0–10.0% but did not lay out potential future policy rate decisions or risks to the inflationary outlook. However, it highlighted that the signing of the Memorandum of Understanding to eliminate the monetary financing of the budget by the Bank of Ghana was essential to set the economy on a disinflationary and sustainable growth path.

Looking ahead, most of our panelists believe that the tightening cycle has finished; the Consensus predicts approximately 100 basis points of rate cuts before the end of 2023.

The next monetary policy decision will be announced on 24 July.

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