The Bank of Ghana 14-day bills auction has absorbed GH¢9.97 billion from the financial system, only days after the Monetary Policy Committee maintained the benchmark policy rate at 14%.
Results of Tender 880, conducted on September 23, show the central bank allotted the short-term securities at discount rates ranging from 10.4000% to 10.4578%.
The weighted average discount rate settled at 10.4555%, equivalent to an annualised interest rate of 10.4977%.
“Total amount sold: GH¢9,969.39 million,” the Bank of Ghana stated in its auction notice. The securities, identified by ISIN GHCBAGH01470, mature after 14 days.
BoG Uses Bills to Manage Banking Liquidity
Unlike Treasury bills issued for government financing, Bank of Ghana bills are monetary policy instruments used by the central bank to influence liquidity and short-term interest rates.
By selling the securities, the Bank temporarily moves funds out of the banking system and replaces them with short-duration interest-bearing assets.
The nearly GH¢10 billion transaction therefore gives an indication of the amount of liquidity financial institutions were prepared to place with the central bank for a two-week period.
The auction does not, on its own, establish the net amount of liquidity withdrawn. That calculation would require information on maturing Bank of Ghana bills and other liquidity operations occurring around the same time.
Still, the scale of the sale shows that short-term liquidity management remains active even after the MPC decided against another reduction in the policy rate.
The 10.4977% weighted average interest rate on the bills is about 3.50 percentage points below the Bank’s 14% policy rate.
That difference can emerge when banks hold surplus funds and are willing to accept lower returns for short-term instruments carrying direct central bank exposure.
For financial institutions, the attraction lies in the short maturity and relatively predictable return without committing funds to longer-dated securities.
For the Bank of Ghana, absorbing excess liquidity can help prevent short-term market rates from falling too sharply and reduce the risk that surplus funds feed stronger foreign exchange demand or excessive credit expansion.
Auction Reinforces Cautious Monetary Stance
The operation follows the MPC’s unanimous decision to keep the policy rate unchanged at 14%.
Although headline inflation remains relatively low, the central bank has identified emerging risks from external pressures, higher non-food inflation and liquidity conditions.
A policy rate signals the direction of monetary policy, but day-to-day liquidity operations determine how that stance passes through the banking system.
The latest bill sale therefore complements the MPC’s decision by keeping short-term liquidity under tighter control.
The 14-day tenor gives the central bank room to reassess conditions quickly.
Once the securities mature, the GH¢9.97 billion can return to the banking system unless the Bank rolls over the bills or conducts another operation.
That flexibility is useful when government payments, foreign exchange interventions and maturing securities cause sudden changes in liquidity.
There is also a cost. The Bank must pay interest on securities it issues, meaning repeated large-scale auctions can create expenses for the central bank.
For now, Tender 880 shows that the Bank of Ghana is continuing to use short-term securities aggressively to manage liquidity while keeping its benchmark rate unchanged.
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