91-day, 182-day T-bill rates fall 29.49%, 31.70% respectively – BoG

Interest rates on the money market, “broadly trended downward at the short end of the yield curve” in 2023, Bank of Ghana Governor, Dr Ernest Addison has said.

He told journalists on Monday, January 29, 2024 after the Monetary Policy Committee meetings that the 91-day and 182-day treasury bill rates decreased to 29.49 per cent and 31.70 per cent respectively, in December 2023, from 35.48 per cent and 36.23 per cent respectively, in the corresponding period of 2022.

Similarly, Dr Addison said the rate on the 364-day instrument decreased to 32.97 per cent in December 2023 from 36.06 per cent in December 2022.

He reported that the interbank weighted average rate “remained well-aligned within the policy corridor by the end of 2023”.

The weighted average rate, he added, “increased to 30.19 per cent in December 2023 from 25.51 per cent in December 2022, in line with the monetary policy rate and supported by adjustments made in the cash reserve ratio”.

“The average lending rates of banks eased marginally to 33.75 per cent in December 2023 from 35.58 per cent a year earlier”, Dr Addison noted.

Meanwhile, base money growth “slowed down significantly through 2023 and was supportive of the disinflation process”, the Governor said.

He said: “Growth in reserve money defined to include currency outside banks and commercial banks reserves, slowed down significantly to 29.2 per cent by end December 2023 relative to a growth rate of 57.5 per cent observed in December 2022”.

The “sharp slowdown was driven in large part, by strong sterilisation efforts and effective liquidity management operations”, he noted.

He said: “With a tight monetary policy stance and increased risk aversion of banks due to rising credit risks, private sector credit expansion broadly remained sluggish in the year”.

Dr Addison added that in December 2023, “the pace of growth in private sector credit slowed to 10.7 per cent, compared with 31.8 per cent annual growth in December 2022”.

In real terms, he said credit to the private sector contracted by 10.2 per cent relative to a 14.5 per cent contraction, recorded over the same comparative period.