IMF Working Papers

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

By Arto Kovanen

November 1, 2011

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Arto Kovanen. Monetary Policy Transmission in Ghana: Does the Interest Rate Channel Work?, (USA: International Monetary Fund, 2011) accessed September 20, 2024
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

Subject: Banking, Central bank policy rate, Deposit rates, Financial institutions, Financial services, Interbank rates, Market interest rates, Treasury bills and bonds

Keywords: Africa, Central bank policy rate, Deposit rates, Interbank interest rate, Interbank market, Interbank rates, Interest rate channel, Interest rate determination, Lending interest rates, Market interest rates, Monetary policy transmission, Money market, Policy interest rate, Time deposit, Transmission process, Treasury bills and bonds, WP

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2011/275

  • Stock No:

    WPIEA2011275

  • ISBN:

    9781463925314

  • ISSN:

    1018-5941

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