Fitch Solutions, an international rating agency, says a gradual improvement in investor sentiment and a US$600 million International Monetary Fund (IMF) disbursement will keep the exchange rate stable.
In a report detailing interest rate and inflationary dynamics for 2024, the rating agency said it predicted that the disbursement and investor sentiments would keep the cedis at roughly GHS12.0/USD throughout first quarter of 2024, only slightly weaker than the average of GHS11.8 to a USD recorded in the year-earlier period.
As such, the report said price pressures stemming from imported goods and services will remain limited over the coming months, supporting the ongoing disinflationary trend.
The rating agency said inflation would remain above the 20 per cent mark ahead of the March Monetary Policy Committee (MPC) meeting, which will prompt a vigilant approach from central bank policymakers.
“In the coming months, price pressures will moderate at a much slower pace compared to the final quarter of 2023. This is partly due to the uptick in global oil prices caused by hostilities between Israel and Hamas, and a sharp increase in global shipping costs caused by rising tensions in the Red Sea. Consequently, inflation rates are set to stay well above the levels preferred by the Bank of Ghana with significant upside risks,’’ the report said.
This situation, the rating agency noted, underpinned their expectation that the central bank would not opt for a larger rate cut at the March MPC meeting.