In brief
- Loosening the monetary sails on disinflation tailwind. The Bank of Ghana’s MPC surprised with a deeper-than-expected 350bps cut in the policy rate to 21.5% (IC Insights: -300bps), frontloading part of our expected future easing and striking a more bullish note. The Committee reaffirmed its confidence in continued decline in inflation to within the medium-term target band of 8.0% ±2.0% by end-2025, while reframing the risk from the looming utility tariff hike as a medium-term concern. We now see inflation around the midpoint of the medium-term target range by end-2025.
- Banks’ FX trading gains likely constrained in tightened NOP limits. In a surprise move, the Bank of Ghana revised banks’ Net Open Position limit from ±5% to a band of 0% (flat net FX position) to -10% (short net FX position), effective 01 October 2025. We think this move partly aims to mitigate potential FX risk from lower yield on OMO securities likely arising from the policy rate cut. We expect this to push banks into unwinding FX buffers, shift into long Cedi positions, and boost short-term FX turnover. However, we foresee tighter FX liquidity on banks’ balance sheets and a weaker prospect for FX trading income.
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