Even as the Bank of Ghana (BoG) raised its monetary policy rate (MPR) by 100 basis points (bps) to 28 percent – citing persistent inflationary pressures and global economic uncertainties last week – it also announced a series of additional operational measures aimed at strengthening liquidity management and improving the transmission of monetary policy.
Governor Dr. Johnson Asiama indicated that in addition to adjustment of the policy rate, the Bank is implementing complementary measures to strengthen liquidity management and enhance monetary policy transmission.
“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”.
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 of 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.
Inflation stood at 23.1 percent in February 2025, which has slowed slightly from 23.8 percent in December 2024. However, the MPC remained cautious about lingering risks.
The central bank pointed out that monetary policy must remain tight to anchor inflation expectations and support macroeconomic stability. “Future policy decisions will be guided by inflation dynamics, global economic trends and fiscal developments,” the Governor explained.
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.
However, 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 BoG’s latest policy measures come at a time when global financial conditions remain tight.
