The Bank of Ghana cut its prime rate by 50 basis points to 13 percent, its governor said on Friday, confounding most analyst expectations that it would keep the rate on hold for a fourth meeting in a row, according to Reuters. The announcement came after figures on Wednesday showed annual inflation in April dipped to 9.02 percent from 9.13 percent in March. "Given the balance of risks to prices and output growth and recognition of the improved economic environment the Monetary Policy Committee has decided to reduce the policy rate by 50 basis points to 13 percent," Governor Kwesi Amissah-Arthur told a news conference. "Our current baseline forecast for the next 12 months suggests that inflation will remain close to nine percent on a year-on-year basis," he said. Most analysts had expected the bank to keep rates on hold, citing future inflation risks. But some had said Wednesday's surprise fall in inflation opened the window to a rate cut. The cut "may provide a small, albeit short-term boost to Ghanaian fixed income, but it is difficult to see the justification for a sustained easing cycle," said Razia Khan, analyst at Standard Chartered Bank. "In the absence of more long-dated issuance, extending the maturity of the domestic curve, the Ghana cedi is unlikely to gain substantially as a result," she said.
