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

Arto Kovanen

No 2011/275, IMF Working Papers from International Monetary Fund

Abstract: 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

Keywords: WP; lending interest rates; time deposit; policy interest rate; interbank market; interest rate determination; monetary policy transmission; interest rate channel; transmission process; interbank interest rate; money market; Deposit rates; Market interest rates; Central bank policy rate; Interbank rates; Treasury bills and bonds; Africa (search for similar items in EconPapers)
Pages: 32
Date: 2011-11-01
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Citations: View citations in EconPapers (20)

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