The Bank of Ghana (BoG) has announced a significant change in its monetary policy toolkit, returning to the use of the 14‑day Government bill as its main instrument for open market operations. The move comes alongside a sharp 350‑basis point cut in the policy rate, bringing it down to 18.0 percent.
Speaking at the 127th Monetary Policy Committee (MPC) press briefing, BoG Governor Dr. Johnson Pandit Asiama said the decision reflects the central bank’s confidence in the stability of Ghana’s economy and its continued efforts to support growth.
“Overall macroeconomic conditions have broadly improved. With inflation expected to decline further, and with a significant buildup of reserves providing an anchor for exchange rate stability, the prevailing high real interest rates give us some room to ease policy to boost growth recovery. In addition to the policy rate reduction, the bank will now return to the use of the 14-day bill as its main instrument for conducting open market operations” Dr. Asiama said.
Open market operations, which involve the buying and selling of government securities, are a key tool used by central banks to manage liquidity and influence short-term interest rates. The return to the 14-day bill allows the Bank of Ghana to fine-tune liquidity in the banking system more quickly and efficiently, helping ensure that interbank rates align closely with the policy rate.
By lowering short-term interest rates, banks may find it easier to lend, potentially boosting credit flows to businesses and households and supporting economic activity.
Ghana’s economy has shown signs of steady recovery. Following a 6.3% growth in GDP in the first half of the year, provisional data indicates 5.1% growth in August, compared with 4.9% in the same month last year. The improvement has been largely driven by the services and agriculture sectors.
Inflation has also come down significantly, easing to 8.0% in October, a first since July 2021, thanks to a tight monetary stance, fiscal consolidation, a relatively stable currency, and improved food supply.
Governor Asiama noted that with these positive developments, the central bank can now provide more support for growth without compromising price stability. “We will continue to monitor developments closely and take the appropriate policy actions to ensure sound and stable macroeconomic conditions,” he added.
