Ghana targets lowest inflation since at least 2000

Ghana wants to bring inflation rates down to a decade low 9.2-9.4 percent by the end of the year, its central bank said on Wednesday, a target that would open the door to deeper interest rate cuts.

The West African country, one of the region's top economies and among the few sub-Saharan states with a eurobond, has already wrestled the pace of inflation down from over 20 percent in 2009 to just over 14 percent in February.

"We think that, on the basis of the trend that we've seen, inflation will end the year at about 9.2 to 9.4 percent," central bank governor Kwesi Amissah-Arthur said at a meeting with business leaders in the capital.

That would be the lowest inflation rate since at least 2000, according to the central bank's Web site, which has no inflation data available prior to that year.

Ghana, which is the world's No. 2 cocoa producer, Africa's second biggest gold miner and on track to become a commercial oil producer by end of this year, had been under pressure from the International Monetary Fund to reign in runaway inflation.

The steady declines from the 2009 peaks, however, have paved the way for two consecutive cuts to the central bank's prime interest rate since November, and analysts expect more are on the way as the nation eyes 5.7 percent growth in 2010.

Amissah-Arthur said the cuts, which have brought the prime rate to a 20-month low of 16 percent, have already started to filter down into commercial lending rates -- which have declined to 32 percent from about 37 percent last year.

"The banks have started reducing their rates in response to the easing monetary policy stance," he said.

He added that the central bank would seek to further encourage lower-cost lending by setting up a credit reference bureau to provide data on borrowers with a view to reducing the chances of issuing bad loans.

Annualised inflation in February fell for the eighth consecutive month to hit 14.23 percent, its lowest level in nearly two years.