Ghana cuts interest rate by most in six years with inflation seen easing

Ghana lowered interest rates by more than expected after the pace of inflation slowed in the West African nation and is expected to cool further.

The monetary policy committee cut the key rate to 27% from 29%, Governor Ernest Addison told reporters at a press briefing in Accra, the capital, on Friday. None of the four economists polled by Bloomberg expected a reduction of that size. The cut is the steepest since March 2018.

Inflation is expected to continue to ease toward the central bank’s year-end goal of 13% to 17% and “steadily track towards the medium term target of 6% to 10% by the end of 2025 baring unanticipated shocks,” Addison said. Risks to the inflation outlook are assessed to be fairly balanced, he said.

The rate cut comes ahead of presidential elections on Dec. 7 in which Vice President Dr. Mahamudu Bawumia — the ruling New Patriotic Party’s candidate for the top job — is considered an underdog to opposition leader John Dramani Mahama amid public anger over the economy and high cost of living.

Still, annual inflation has now slowed for five consecutive months to 20.4% in August, from 25.8% in March.