Easing Inflation “Compels” Fitch to Upgrade Ghana Cedi’s End-Year Forecast to ₵13/$1 from ₵15.5/$1

Ghana‘s economic outlook continues to garner confidence from major international development partners and rating agencies.

The latest to pass a vote of confidence in Ghana’s economic outlook, especially the fortunes of the exchange rate, is Fitch Solutions.

Fitch, in an interesting turnaround, has revised its projections of Ghana’s end-year 2025 cedi to dollar rate. From an earlier forecast of GHC 15.5/USD despite the gains the cedi was making, Fitch has revised this end-year rate to GHC 13/USD, marking significant confidence in the country’s economic outlook.

What compelled the research firm to revise its notes was the favorable inflation trajectory and recent gains by the local currency.

The cedi, for most of the 2025 fiscal year, has enjoyed a remarkable rebound, appreciating by about 30%. This strength is buoyed by rising global gold prices. With inflation beginning to retreat and the exchange rate firming up, Fitch believes the outlook for the Ghanaian economy is becoming increasingly optimistic.

Inflation has started cooling. April 2025 saw year-on-year inflation fall to 21.5%, down from 23.5% in January, and Fitch expects the trend to continue. The firm now forecasts inflation to average 18.0% in 2025 and end the year at 13.1%.

The firm considers this easing of inflation as pivotal in improving the cedi’s strength and overall economic stability. It reduces import costs and boosts consumer confidence, given Ghana’s reliance on foreign goods like fuel, cereals, and pharmaceuticals.

Fitch also anticipates a shift in the Bank of Ghana’s monetary stance. Despite raising the benchmark policy rate to 28.00% in March to tame early-year inflationary pressures and maintaining the rate in the MPC meeting, the firm predicts that the Central Bank is likely to initiate a cumulative 200 basis points in rate cuts in the second half of the year.

This move is expected to result in the policy rate ending in 2025 at 26.00%.

The combined effects of a firmer currency, moderating inflation, and possible monetary easing are expected to bolster household purchasing power and accelerate consumer spending growth.

Fitch’s favorable forecast signals growing confidence in Ghana’s macroeconomic environment. However, this favourable forecast is threatened by external factors, fiscal indiscipline, and the failure to undertake any structural change in the economy.

As the Finance Minister, Dr. Cassiel Ato Forson, prepares to present the 2025 Mid-Year Budget to Parliament, it is anticipated that measures will be announced to ensure that the gains made in the cedi are sustained and not revert to the old free fall.

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