In brief
- Disinflation below the target reinforces policy credibility. Ghana ended 2025 with inflation falling to 5.4% in December (IC Insights forecast: 5.3%), marking the 12th consecutive monthly decline and an 18.4pp cumulative drop over the year. The year-end inflation outperformed both the Bank of Ghana’s medium-term target floor (6.0%) and the Treasury’s year-end target (11.9%), underscoring a credible return to macroeconomic stability. The disinflation remained widespread across food (4.9% y/y | -170bps) and non-food (5.8% y/y | -30bps), reflecting the impact of complementary policy tightness, fiscal intervention in agrarian supplies, Cedi strength, and lower energy prices.
- Restrained price pressures will sustain the dovish bias at the January 2026 MPC meeting. Disinflation approaches late cycle but we expect the annual headline rate to ease further to 5.1% in January 2026, despite festive-related food price pressures and higher electricity and water tariffs. The softer new VAT regime, lower petroleum prices and the late-2025 Cedi gains preserves a favourable start to the year. This will sustain the MPC’s dovish bias at the upcoming meeting in late-January 2026, albeit with caution through 1Q2026. We thus expect between 100bps – 150bps cut in the nominal policy rate to between 17.0% – 16.5%, maintaining the authorities strategic preference for double digits real rates through 1Q2026.
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