Ghana: Bank of Ghana intensifies liquidity mop-up to support inflation control

The Bank of Ghana (BoG) has stepped up its liquidity management operations, absorbing GH¢28.21 billion from commercial banks through two 14-day bill auctions as part of efforts to contain inflationary pressures while sustaining the country’s economic recovery.

The auctions, conducted on July 27 and July 29, 2026, highlight the central bank’s growing use of BoG bills to sterilise excess liquidity in the banking sector and maintain the effectiveness of its inflation-targeting framework.

Unlike Treasury bills, the 14-day BoG bills are issued solely to commercial banks and function as a monetary policy instrument rather than a mechanism for financing government expenditure.

The latest intervention comes amid a significant improvement in liquidity conditions following an extended period of monetary tightening.

Reserve money, which contracted earlier in the year, has rebounded strongly, while broader measures of money supply have continued to expand.

According to the Bank of Ghana’s latest monetary data, total liquidity—measured by broad money and foreign currency deposits—increased by 28.5 per cent year-on-year to GH¢417.6 billion in June.

Reserve money also rose by 31.7 per cent to GH¢148.5 billion, largely reflecting increased reserves held by commercial banks.

The expansion in liquidity has been supported by stronger deposit mobilisation, easing interest rates and improved external sector performance, particularly higher export earnings that strengthened Ghana’s net foreign asset position.

The central bank acknowledged during its May Monetary Policy Committee meeting that interbank interest rates remained close to the lower end of the policy corridor, an indication of surplus liquidity within the financial system.

Economists note that sterilisation through BoG bills is intended to reduce the risk of excess liquidity fuelling inflation, speculative demand for foreign exchange and unsustainable growth in aggregate demand.

At the same time, the central bank appears focused on maintaining a balance between liquidity management and supporting economic activity, avoiding measures that could excessively tighten financial conditions.

BoG Governor Dr Johnson Pandit Asiama recently identified liquidity management and inflation control as key monetary policy priorities. He also announced the end of the Bank’s pre-financing arrangements for domestic gold purchases from July 1, a move expected to reduce additional liquidity injections into the economy.

Analysts say the effectiveness of the central bank’s approach—managing inflation while preserving growth momentum—will be crucial in sustaining Ghana’s recent macroeconomic gains.

The latest liquidity operations underscore the importance of sound monetary policy, risk management and financial sector oversight in preserving price stability and strengthening confidence in Ghana’s economic framework.