The Bank of Ghana (BoG) has raised GH¢7.0 billion at an average interest rate of 21.46% in its latest short-term bill auction held on October 20, 2025.
This market operation of the BoG enforces the bank’s continued tight monetary stance aimed at anchoring inflation expectations and stabilizing the cedi.
The auction report published by the BoG reveals that it covered 56-day BoG bills, with investors submitting bids ranging from 20.00% to 20.81% per annum, all of which were accepted in full.
The strong investor participation in the auction is an indication of a growing demand for high-yield, risk-free securities.
The central bank’s decision to keep the interest rates higher shows it remains firmly focused on maintaining inflation at lower levels. By offering such attractive yields, the BoG aims to soak up excess liquidity in the financial system, discourage speculative demand for foreign currency, and reinforce price stability.
But this monetary move by the BoG has implications for the government. While the policy move helps the BoG control inflation, it also poses a challenge for the government’s Treasury bill auctions, where yields currently average between 10% and 12%.
With BoG bills now offering nearly double those returns, investors, particularly banks and fund managers, may begin shifting their funds from Treasury bills to BoG bills, which are seen as equally safe but more rewarding.
That shift could hurt the government’s short-term fundraising efforts, forcing the Ministry of Finance to either raise its T-bill rates to attract buyers or risk undersubscription in future auctions.
Already, the government has been experiencing undersubscription in its T-Bill auction, putting a strain on how it finances its recurrent expenditure.
The situation underscores the delicate balancing between fiscal and monetary policy. On one hand, the BoG is tightening conditions to tame inflation and defend the cedi. On the other hand, the government needs affordable borrowing to fund operations without escalating debt service costs.
