Ghana’s domestic bond market is poised for a revival later this year, with IC Research projecting that Treasury bond offers could return by late in the third quarter of 2025. The firm sees the country’s recent sharp disinflation as a crucial catalyst, restoring investor confidence and lowering borrowing costs for the government.
In its latest analysis, IC Research explains that inflation has been falling more quickly than previously anticipated, largely thanks to a stronger-than-expected cedi performance and easing food price pressures. This improvement is creating room for bond yields to drop further, potentially into the m id-teens, opening the door for renewed issuance.
“We view the sharp disinflation as a renewed catalyst for a price rally on the domestic bond market with yields likely plunging further towards the mid-teens to open an issuance window for the Treasury by late-3Q2025,” the firm noted.
The firm also expects longer-dated bonds, particularly those maturing between 2031 and 2038, to be especially responsive to falling yields. With estimated modified durations of 3.6 to 4.6, these maturities are seen as more sensitive to price movements, offering an attractive opportunity for the government to re-open issuance across this segment.
Beyond the bond market outlook, IC Research has revised its overall inflation forecast for the end of 2025, reflecting greater optimism while remaining mindful of potential risks. The firm now projects inflation will settle between 10.3% and 12.3% (with a midpoint of 11.3%), down from its earlier range of 11.8% to 13.8%.
This adjustment is driven by the stronger pass-through of cedi appreciation, better-than-expected June disinflation, and expectations of a strong crop harvest in the third quarter. These factors, combined with a favourable base effect in the fourth quarter, are expected to sustain the disinflation trend into the second half of the year.
“We expect the upcoming crop harvest in 3Q2025 and a favourable base effect in 4Q2025 to fan the disinflation flame in 2H2025 with a slight possibility to land on a single digit in the 9.0% area by FY2025,” IC Research explained.
However, the outlook remains guarded. IC Research warns that planned policy measures could add renewed pressure to prices, threatening the pace of disinflation. Chief among these risks are a possible major electricity tariff hike in the fourth quarter and the expected reintroduction of the suspended GHS 1.0 per litre fuel levy, set to take effect on 16 July 2025.
“Our anticipation of a major hike in electricity tariff in 4Q2025 and introduction of the suspended GHS 1.0/litre fuel levy on 16 July 2025 keeps us cautious on the pace of disinflation,” the firm added.
For the near term, IC Research projects annual inflation will decline by about 100 basis points in July 2025, landing at 12.7%. Nonetheless, it highlights certain upside risks, including a 2.45% electricity tariff increase and the closed fishing season for industrial trawlers, which could exert temporary upward pressure on prices.
In parallel with its inflation outlook, IC Research has also updated its view on monetary policy. It now expects the Bank of Ghana’s Monetary Policy Committee to take a more dovish stance at its July meeting, raising its forecast for the size of the policy rate cut to at least 300 basis points from an earlier estimate of 200 basis points.
“With the real policy rate widening to 14.3% in June (vs 9.6% in May) and core inflation firmly in single digit, we think the MPC has room for a deeper cut beyond our revised call,” the report said.
Yet even on this front, the firm advises caution, noting the need to support cedi stability and avoid fueling second-round inflation effects from the looming fuel levy.
“We opt to stay cautious on the expected dovishness in order to consolidate FX stability and avert a second-round effect from likely higher fuel levy in 3Q2025,” IC Research warned.
Overall, the analysis presents a balanced but hopeful outlook. Falling inflation is creating space for a bond market rally and lower borrowing costs, while also giving the central bank room to ease rates. But these benefits depend on managing policy-driven price shocks carefully to avoid undermining the fragile stability Ghana has started to rebuild.
