The committee of Ghana's central bank decided to trim the monetary policy rate by 200 basis points to 18% as both the inflation rate and inflation expectations continue to decline.
Bank of Ghana said the current inflation forecast makes it possible for monetary policy to realign interest rates, translate disinflation gains, and reinforce the fiscal consolidation process by reducing the government's interest burden.
The central bank noted that headline inflation posted a sharp decline in January, dropping to 10.3% from 11.8% in December 2017. For February, headline inflation edged up slightly to 10.6%. The bank's main gauge for core inflation, which excludes energy and utility, dropped to 11.3% in February from 12.6% in December 2017.
The weighted inflation expectations of businesses, consumers and the financial sector continued to decline, and the bank said it was on course to meet its medium-term target of 8% plus or minus 2%.
The bank also said the country's growth prospects should remain positive in 2018, supported by crude oil production, a gradual recovery in the non-oil sector, and favorable business and consumer sentiment.