Fitch Solutions predicts risks to Ghana's interest rates

Ghanaian

Fitch Solutions anticipates potential upward risks to Ghana's interest rate outlook, citing geopolitical tensions and disruptions in global trade that could lead to increased commodity prices.

The latest article titled "More Interest Rate Cuts On The Way In Ghana, Following Cautious Start Of Easing Cycle" suggests that Ghana, being a net importer of fuel and food items, might face higher

Read full articleimport costs, disrupting the disinflation process.

The report highlights the risk of stalled negotiations between Ghana and its commercial creditors, potentially delaying International Monetary Fund (IMF) disbursements and eroding investor confidence.

Such a scenario could trigger a sell-off of the cedi and a resurgence of inflation, prompting the Bank of Ghana to adopt a more conservative monetary easing cycle than initially forecast.

Despite these concerns, interest rates in Ghana have shown overall stability. The Bank of Ghana reports a downward trend in rates at the short end of the yield curve.

In December 2023, the 91-day and 182-day Treasury bill rates decreased to 29.49% and 31.70%, respectively, compared to 35.48% and 36.23% in the corresponding period of 2022. Similarly, the rate on the 364-day instrument decreased to 32.97% in December 2023 from 36.06% in December 2022.