Bank of Ghana announces new monetary policy measures

The Bank of Ghana has announced some new measures that will go a long way to better manage the amount of cedis in circulation.

The move will see the central bank merge its policy rate and reverse repo rate, (the effective rate the Bank of Ghana lends to commercial banks in the country).

According to the Bank of Ghana, this will be effected from tomorrow August 13.

Below is a statement from the Bank of Ghana;

Following the outcome of the recent Monetary Policy Committee meetings, the Bank has decided to merge the Monetary Policy Rate and the Reverse Repo Rate (the effective rate at which Bank of Ghana lends to commercial banks) with effect from August 13, 2015.

The merged rate shall continue to be referred to as the Monetary Policy Rate and will be positioned at 24 per cent. This merger is to ensure transparency in the monetary policy stance of the Bank of Ghana.

These changes, in effect, do not reflect a change in monetary policy stance, since the maximum lending rate of the Bank of Ghana remains unchanged at 25 per cent.

The Bank has also introduced a 7-day Reverse Repo (lending) Facility, available to all banks to help them manage liquidity more effectively. The Reverse Repo Facility is the principal instrument through which Bank of Ghana will inject liquidity into the banking system during periods of general liquidity shortage. The detailed modalities and procedures for accessing the facility have already been communicated to the banks.