Interest rate on BoG’s 56-day bills rises to 29.03%
The Bank of Ghana recently raised GHS 1,558 million through its issuance of Bank of Ghana (BoG) bills with a 56-day maturity period.
The auction took place on August 23, 2023, where the central bank sold short-term securities on the primary market to manage liquidity in the banking system and regulate money supply.
The BoG bills were auctioned at an interest rate of 29.03%, highlighting the central bank’s ability to attract domestic financial market funding in support of its monetary policy goals.
The 29.03% interest rate is an increase of +53bps (0.53%) from the previous auction’s interest rate of 28.5%.
Prior to that, interest rate on the 56 day bill stood at 27.08%.
These bills are integral to the central bank’s Open Market Operations (OMO) toolkit, enabling it to influence credit cost and availability by adjusting the money supply.
Central to the purpose of BoG bills is their role in managing banking system liquidity through the sale of short-term securities on the primary market.
This approach aids the central bank in controlling the money in circulation and promoting financial stability.
Notably, funds obtained from the BoG bills auction are often extended to the government to fulfill short-term financial requirements.
This suggests the government’s potential reliance on central bank borrowing for budgetary or other commitments.
In a broader context, the issuance and auction of BoG bills serve as a pivotal monetary policy instrument for the Bank of Ghana.
The outcome of the recent auction underscores the central bank’s adeptness at securing funding from the domestic financial market, supporting its monetary policy objectives.
As the central bank navigates a challenging economic landscape, the efficacy of its monetary policy tools will remain critical in achieving its objectives of price stability and economic growth.
