Bank of Ghana Projects a Decrease in Inflation to a Range of 13-17% by December 2024

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The Bank of Ghana anticipates a further decrease in headline inflation to a range between 13 – 17% by the conclusion of 2024, with a gradual return to the medium-term target range of 6 – 10% by 2025, barring unforeseen shocks. The January 2024 Monetary Policy Report highlights geopolitical tensions and potential impacts on commodity markets, particularly international crude oil prices, as significant risks to the inflation outlook, which could hinder the disinflation process.

Despite these risks, the report indicates positive outcomes from the current macroeconomic framework, supported by the International Monetary Fund-Economic Credit Facility program. It notes that while inflation is expected to persist above the upper band of the medium-term target until 2025, all Central Bank measures of core inflation are on a downward trajectory, suggesting ongoing easing of underlying inflationary pressures.

Furthermore, the Bank of Ghana expects improved forex inflows from IMF-ECF disbursements, the cocoa syndicated loan, and anticipated funding from the World Bank to bolster foreign exchange reserves. Additionally, initiatives such as the Gold for Reserves program, repatriation of foreign exchange from mining and oil companies, and reduced debt service payments are expected to enhance reserve accumulation and exchange rate stability, supporting the disinflation process.

In February 2024, inflation rose marginally to 23.5%, following five consecutive months of decline. This increase was attributed to a notable surge in non-food items, including housing, clothing, and transport, leading to an uptick in year-on-year non-food inflation to 20.5% in January 2024 from 18.7% in December 2023, according to data from the Ghana Statistical Service.

Source: Joy business



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