BoG raises GHS 1.17bn at almost 31% interest cost

The Central Bank recently raised GHS 1.17bn through the issuance of its own bills [Central Bank Bills] with a maturity period of 56 days.

The auction, which took place on October 18, 2023, saw the central bank selling short-term securities on the primary market to regulate money supply and manage liquidity in the banking system.

The interest rate at which the Central Bank bills were auctioned stood at 30.87%.

While the value of bids made by commercial banks was not disclosed, the auction outcome highlights the central bank’s ability to attract funding from the domestic financial market in support of its monetary policy objectives.

The BoG bills are typically used in Open Market Operations (OMO), which are monetary policy tools used by central banks to manage money supply.

Through OMO, the central bank can influence the cost and availability of credit in the economy by adjusting the supply of money in circulation.

It is worth noting that the funds raised from the auction of the Central Bank bills are often loaned directly to the government to support its short-term needs.