Bank of Ghana makes changes in monetary operations

The Bank of Ghana (BoG) announced it has introduced new changes to its monetary operations.

The central bank is realigning the policy corridor by what it describes as “widening the band”.

“The Reverse repo rate is now 200 basis points above the policy rate while the repo rate is at 100 basis points below it,” BoG Governor, Dr Kofi Wampah said during a Monetary Policy Committee press conference May 22, 2013 in Accra.

According to the Governor, the central bank is also changing its mode of presence in the interbank market by introducing an “informal standing facility” to operationalize its policy decisions and enhance the transmission mechanism.

“These changes have steered the interbank rate within the policy corridor. It is expected that as government restructures its debt and consolidates its fiscal operations, the Treasury bill rates will also fall within the corridor,” Dr Wampah said.

The central bank stated that the new changes will be formalized shortly.

“The Base Rate formula will be implemented by all banks with effect from 2nd July, 2013 to ensure transparency in the pricing of credit in the banking system,” it adds.

Dr Wampah however indicated that the policy measures introduced by the BoG in May 2012 regarding cash reserve requirements, Net Open Position limits, and Vostro balances will continue to be in place.

By Ekow Quandzie