- to enhance monetary policy transmission
- as benchmark MPR goes up to 28%
By Joshua Worlasi AMLANU & Ebenezer Chike Adjei NJOKU
The Bank of Ghana (BoG) has announced a series of additional operational measures aimed at strengthening liquidity management and improving the transmission of monetary policy.
This comes as the central bank raised its monetary policy rate (MPR) by 100 basis points (bps) to 28 percent, citing persistent inflationary pressures and global economic uncertainties.
“In addition to adjustment in the policy rate, the Bank is implementing complementary measures to strengthen liquidity management and enhance monetary policy transmission,” Governor Dr. Johnson Asiama said while addressing media on conclusion of the MPC’s 123rd meeting.
“In this regard, the Bank will introduce a 273-day instrument to augment the existing sterilisation toolkit, intensify the monitoring of banks’ Net Open Positions (NOPs) to ensure compliance and review the Cash Reserve Ratio’s (CRR) current structure to assess its broader impact on liquidity conditions and financial intermediation in the economy,” he added.
The introduction of a 273-day instrument is aimed at deepening central bank sterilisation efforts. The extra open market operation tool will allow for better liquidity absorption and enhance monetary control.
At the same time, the decision to intensify monitoring banks’ Net Open Positions is expected to improve foreign exchange market discipline, reduce speculative pressures in the currency markets and ensure that banks operate within regulatory limits.
Additionally, a review of the CRR’s current structure will assess its effectiveness in managing liquidity and credit expansion in the financial system.
The decision to increase the MPR by 100 bps to 28 percent signals the central bank’s continued effort to curb inflation and stabilise the economy.
Inflation, which stood at 23.1 percent in February 2025, has slowed slightly from 23.8 percent in December 2024. However, the MPC remained cautious about lingering risks.
“The disinflation process is ongoing, but at a slower pace than anticipated. Inflation expectations remain elevated and there are lingering risks to the outlook, including global trade tensions and financial market volatility,” Dr. Asiama noted.
The central bank pointed out that monetary policy must remain tight to anchor inflation expectations and support macroeconomic stability.
“The Committee remains committed to maintaining price stability while supporting economic growth. Future policy decisions will be guided by inflation dynamics, global economic trends and fiscal developments,” the Governor explained.
Financial analysts expect the new measures to play a key role in reinforcing the central bank’s inflation-targetting framework.
Market reactions to the policy decisions have been mixed. While some investors view the MPR hike as a necessary step to curb inflation, others are concerned about its potential impact on borrowing costs and economic growth.
The private sector, which has seen a recovery in credit growth, may face renewed constraints as higher interest rates raise the cost of financing.
The rate hike’s impact on borrowing costs will be closely watched. Private sector credit growth rebounded to 26.9 percent year-on-year in February 2025 from just 5.1 percent a year earlier, but the tightening cycle could slow momentum.
Real credit growth, adjusted for inflation, had turned positive at 3.1 percent after contracting by 14.7 percent in early 2024.
The BoG’s latest policy measures come at a time when global financial conditions remain tight. Major central banks, including the U.S. Federal Reserve and Bank of England, have maintained restrictive monetary policies to combat inflation. The European Central Bank, however, has taken a different approach by cutting rates to support economic growth.
