In an effort to improve the circulation of currencies in the country to stimulate economic growth and aggregate demand, the Bank of Ghana has stated that it will merge the Monetary Policy Rate and the Reverse Repo Rate, with effect from August 13, 2015.
This follows the outcome of the recent Monetary Policy Committee meetings, where the Bank 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.
According to the Central Bank, 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, will 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.
By LAWRENCE SEGBEFIA
