Barclays Ghana has indicated that despite the Central Bank’s unexpected decision to maintain the monetary policy rate at 20 percent, it expects further policy easing in the year.

In its latest analysis, the bank stated: “Our projections indicate that despite near-term pressures from food and international oil prices, headline inflation may ease further to dip into single digits by H2 18, creating room for further policy easing. While we do not expect policy easing to be as aggressive as last year, a maximum reduction of 400bp remains possible. That said, with inflation expected to edge marginally higher up to March, the MPC may maintain this cautious stance at the March meeting, delaying the resumption of rate cuts possibly to May 2018.”

According to Barclays Ghana, the MPC’s decision “was against our expectation for a 100 basis points cut. The surprisingly cautious stance by policymakers was on the back of what they believe were emerging pressures in underlying inflation during the final months of 2017. Notwithstanding, we believe that with inflation on a firm downtrend, further policy easing is likely this year.”

Indicating that food and oil price pressures presented a risk to the country’s inflation outlook, it said the MPC statement highlighted the rise in food and oil prices as a factor that pushed Ghana’s headline inflation from 11.6 percent year-on-year in October to 11.8 percent at December 2017.