Monetary Policy Transmission in Ghana : Does the Interest Rate Channel Work?

Author/Editor:

Arto Kovanen

Publication Date:

November 1, 2011

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper analyzes interest rate pass-through in Ghana. Time series and bank-specific data are utilized to highlight linkages between policy, wholesale market, and retail market interest rates. Our analysis shows that responses to changes in the policy interest rate are gradual in the wholesale market. Prolonged deviation in the interbank interest rate from the prime rate illustrate the challenges the Bank of Ghana faces when targeting a short-term money market interest rate. Asymmetries in the wholesale market adjustment possibly relate to monetary policy signaling, weak policy credibility, and liquidity management. In the retail market, pass-through to deposit and lending interest rates is protracted and incomplete.1

Series:

Working Paper No. 11/275

Subject:

English

Publication Date:

November 1, 2011

ISBN/ISSN:

9781463925314/1018-5941

Stock No:

WPIEA2011275

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

32

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