Monetary Policy Transmission in Ghana: Does the Interest Rate Channel Work?
November 1, 2011
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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
Pages:
32
Volume:
2011
DOI:
Issue:
275
Series:
Working Paper No. 2011/275
Stock No:
WPIEA2011275
ISBN:
9781463925314
ISSN:
1018-5941
