The Bank of Ghana (BoG) has introduced additional measures aimed at tightening liquidity management within the economy. This move is part of the central bank’s broader strategy to ensure macroeconomic stability and improve the effectiveness of monetary policy. These measures follow the BoG’s recent decision to increase the policy rate to 28.0 percent, as part of its ongoing efforts to curb inflation and ensure fiscal stability.
In a press briefing following the 123rd regular meeting of the Monetary Policy Committee, BoG Governor Dr. Johnson Asiama outlined the new actions. One of the key measures is the introduction of a 273-day financial instrument designed to enhance the bank’s sterilization toolkit, offering greater control over liquidity levels in the economy. This tool aims to absorb excess money in circulation and reduce inflationary pressures.
Furthermore, the BoG has emphasized intensified monitoring of banks’ net Open Positions (NOPs) to ensure compliance with regulatory requirements and mitigate potential risks in the banking sector. This increased oversight is expected to reinforce the financial system’s resilience by ensuring that banks operate within their established risk limits.
Additionally, the central bank is reviewing the structure of the Cash Reserve Ratio (CRR) to better assess its impact on liquidity conditions and the broader economy. The BoG remains committed to maintaining price stability and supporting fiscal consolidation, with a firm stance on preventing excessive liquidity from undermining efforts to combat inflation. These actions are crucial for preserving the stability of the financial system and safeguarding the economy against unforeseen economic shocks.
Source: Citi newsroom