Ghana Tops Global Real Interest Rate Rankings at 14.3% as Inflation Plummets

Ghana now holds the world’s highest real policy rate at 14.3%, Fitch Solutions has revealed, as inflation falls sharply while the Bank of Ghana (BoG) maintains its benchmark interest rate at an elevated 28%.

June’s headline inflation eased to 13.7%, down from 18.4% in May, marking the steepest decline in over a year and the lowest since December 2021. The central bank, however, has kept rates unchanged since its surprise 100 basis points hike in March.

“This continues to attract yield-seeking investors, particularly in the context of policy loosening in developed markets.”Fitch Solutions, explained:

Analysts noted that Ghana’s strong external buffers, surging gold exports, and improved investor appetite create room for imminent policy easing without risking cedi depreciation.

“High gold prices and the accumulation of FX reserves suggest the BoG can begin cutting rates without triggering significant depreciation of the cedi,” Fitch said.

The firm expects the BoG to start a rate-cutting cycle in September, forecasting a cumulative 200 basis points reduction by year-end, which would bring the policy rate to 26%. However, it flagged the possibility of an earlier move:

“Given the sharp drop in inflation combined with robust reserves and muted global energy prices, we cannot rule out a rate cut in July.”

Should easing begin this month, Fitch projects the benchmark rate could end 2025 even lower, between 24% and 25%.

The disinflation has been driven by multiple factors; a 50% appreciation of the cedi against the dollar in April and May, falling global energy prices, and easing supply-side constraints. Notably, transport inflation turned negative in June for the first time since 2009, reflecting lower fuel prices, while food inflation also declined due to reduced import costs and favourable base effects.

Fitch revised Ghana’s inflation outlook downwards, now projecting average inflation at 15.4% in 2025 and 12.2% in 2026, compared to earlier forecasts of 17.1% and 13.9%.

Ghana’s external buffers remain solid, with gross international reserves rising to $7.9 billion in April, equivalent to nearly four months of import cover. This stability is underpinned by strong gold exports and favourable terms of trade, amid heightened global geopolitical risks and sustained central bank demand for gold.

Fitch Solutions expects the cedi to remain broadly stable in the second half of 2025, citing policymakers’ preference for exchange rate strength to contain imported inflation.

As Ghana cements its position as the world’s highest real yield destination, market watchers await the BoG’s next Monetary Policy Committee meeting later this month for clues on the timing of long-anticipated monetary easing.

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