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The International Monetary Fund forecasts a year-end inflation rate of 8.7% for Ghana.
That indicates a possible reduction in the cost of loans in the coming months.
This is consistent with Fitch Solutions’ 8.5% forecast and comes at a time when the Bank of Ghana’s Monetary Policy Committee is holding its 98th meeting to review the evolution of the economy.
There are high expectations for a slight drop in interest rates over the next three months to help boost business and consumer spending.
Inflation, which is an increase in the general prices of goods and services in an economy, is an important determinant of the cost of borrowing; and therefore, the Bank of Ghana considers it crucial to price its base interest rate.
The expected lower inflation will boost the economy, encouraging savings, investments and will also deepen the international competitiveness of the nation.
It will also ease the cost of doing business for companies and increase their profit margins as a result.
An increase in the financial results of companies will also trigger expansion and job creation. Along with other economic indicators, lower inflation will stimulate stock market activities and prop up stock prices.
Inflation stayed within the 9-10% range for most of last year. According to the Ghana Statistical Service, Financial Services; Inflation in recreation, sports, culture and education services remained very low in 2020.
Inflation was around 9-10% in 2020
Inflation stayed within the 9-10% range for most of last year.
According to the Ghana Statistical Service, financial services (1.7%); Inflation for Recreation, Sports and Culture (0.2%) and Education Services (4.9%) remained very low in 2020.
In fact, inflation ended 2020 at a rate of 10.4%, a marginal increase from November 2020.
