The Bank of Ghana absorbed a combined GH¢21.41 billion from the financial system this week through two separate tenders, stepping up liquidity management operations as the central bank prepares to announce its next monetary policy decision. The Two Tenders

The first tender, held on Monday, saw the Bank of Ghana accept the full GH¢13.71 billion offered at an interest rate of 10.5%. A second tender conducted on Wednesday resulted in a further GH¢7.7 billion being absorbed, at the same rate.

Both operations involved the issuance of 14-day Bank of Ghana Bills, through which the central bank temporarily sterilises excess liquidity held by banks and other participating financial institutions. Because the instruments carry a 14-day maturity, the funds are only temporarily sterilised, allowing the central bank to influence short-term liquidity conditions while retaining the flexibility to release the funds back into the system as the bills mature.

The scale of the combined operations highlights the Bank of Ghana's continued focus on managing liquidity conditions in the financial system, a key component of monetary policy transmission. The intervention could have implications for short-term money-market conditions, bank liquidity and funding costs, depending on how participating institutions adjust their balance sheets and liquidity positions.

Ahead of the MPC Meeting

The timing of the liquidity absorption comes just days before the Bank of Ghana's 132nd Monetary Policy Committee (MPC) meetings, scheduled for September 22 to 24, with the policy decision expected on Thursday, September 24.

The central bank has previously indicated that liquidity management and sterilisation remain important tools in maintaining the appropriate monetary policy stance, and its latest monetary policy report identifies sterilisation efforts as part of the measures supporting the inflation outlook.

Attention will now turn to how this week's sizeable liquidity absorption affects money-market rates and bank liquidity in the days leading up to the MPC meeting.