Some market watchers have welcomed the Bank of Ghana’s decision to reintroduce the 14-day bill for open market operations, arguing that it will help the central bank tighten liquidity control and improve the transmission of monetary policy.
This follows the announcement made during the 127th Monetary Policy Committee meeting, where the central bank confirmed it will return to the shorter-tenor instrument as part of efforts to manage liquidity in a declining interest-rate environment.
Banking consultant Dr. Richmond Atuahene says the 14-day bill gives the Bank of Ghana a quicker and more effective tool to respond to liquidity changes, ensuring that the recent drop in the policy rate is felt across the economy.
“By using the shorter term, Bank of Ghana can react more quickly to changes in liquidity, helping to ensure that policy rate decisions transmit effectively to the economy,” he said.
“The policy rate has dropped from 27 percent to 18 percent, and if the Bank of Ghana does not create another leg, it can affect the policy rate. The 14-day bill becomes an instrument to manage liquidity changes as rates fall.”
He adds that the return of the instrument marks an important addition to the central bank’s toolkit.
“To me, it is a new part of monetary policy intended to make the policy rate more responsive,” he noted.
The reintroduction of the 14-day bill is expected to complement existing liquidity-management tools as the Bank of Ghana navigates a lower interest-rate regime following months of disinflation.
