The Monetary Policy Committee of the Bank of Ghana has cut the policy rate by 100 basis points from 30% to 29% for the first meeting of the year.

The decision is based on core inflation figures easing downwards while several factors have supported the disinflation process.

These include, the tightening monetary policy stance throughout 2023, favourable international crude oil prices which led to stable ex-pump prices and transportation costs and relative stability in the exchange rate.

BoG Governor Dr. Ernest Addison made this known speaking to journalists at the 116th MPC press briefing held in Accra on January 29, 2024.

"The latest forecast suggests that the disinflation process will continue, and headline inflation is expected to ease to around 13-17 percent by the end of 2024, before gradually trending back to within the medium-term target range of 6-10 percent by 2025," Dr Addison explained.

"These forecasts notwithstanding, there are upside risks to the inflation outlook and there is need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process," he added.

"The Committee noted the emerging recovery but sees the need to maintain a strong policy stance to consolidate the disinflation gains. Under these circumstances, the Committee decided to reduce the Monetary Policy Rate by 100 basis points to 29 percent," the BoG Governor concluded.

Meanwhile, the policy rate cut by the Bank of Ghana is expected to influence the cost of lending from commercial banks in the next two months.

The development however makes Ghana's Central Bank the first to cut its policy rate in Africa for 2024.

MA/NOQ