Inflation Targeting Framework and Interest Rates Transmission in Ghana: An Empirical Investigation

Sakyi, Daniel; Mensah, Isaac Osei; Obeng, Samuel Kwabena

doi:10.1080/15228916.2017.1327299

Cited by 4 publications

(4 citation statements)

References 36 publications

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“…In addition, monetary base shocks engendered domestic currency depreciation, whereas variations in discount rates were associated with modest pass-through to lending rate. In Ghana, studies have focused on mechanisms of monetary policy transmission (Abradu-Otoo, Amoah & Bawumia, 2003) as well as on how the retail market rate is affected by the policy rate via interest rate pass-through (Acheampong, 2005;Kovanen, 2011;Sakyi, Osei Mensah & Obeng, 2017). From the first perspective, Abradu-Otoo et al (2003) have used structural vector error correction model (SVECM), quarterly data (i.e.…”

Section: Empirical Kinds Of Literature 31 Response Of Monetary Policy To External Shocksmentioning

confidence: 99%

“…Kovanen (2011), within the same context of Ghana, has shown that while in the retail market, the corresponding pass-through to lending and deposit rates were incomplete and protracted, the rates of the wholesale market respond modestly to variations in the rate of monetary policy. Loloh (2014) shows that the inflation rate and the exchange rate pass-through are positively linked, while Sakyi et al (2017) find that in the long-term, commercial banks do not experience complete deposit and lending rate policy rates passthrough. The adjustment in the short term also revealed modest transmission to the deposit and lending rate from the prime rate.…”

Section: Empirical Kinds Of Literature 31 Response Of Monetary Policy To External Shocksmentioning

confidence: 99%

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A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries

Sedegah

Odhiambo

2021

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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In this paper, the extant literature on the impact of external shocks on monetary policy effectiveness with reference to non-WAEMU countries is reviewed. The importance of this literature review is to provide contemporary perspectives to scholars and policymakers on the relevance of the incidence of external shocks to the effectiveness of monetary policy with reference to non-WAEMU countries. The literature reviewed in this study shows that, on the whole, the extent and the degree to which external shocks are transmitted to the domestic economy substantially depend on a plethora of features, namely the absence of exchange rate flexibility; a strong export concentration, especially with respect to commodities; the level of global economic integration; restricted capacities of production; the absence of competitiveness in exports; over-reliance on foreign aid; foreign reserves that are not adequate and capital account openness.

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Section: Empirical Kinds Of Literature 31 Response Of Monetary Policy To External Shocksmentioning

confidence: 99%

Section: Empirical Kinds Of Literature 31 Response Of Monetary Policy To External Shocksmentioning

confidence: 99%

A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries

Sedegah

Odhiambo

2021

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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“…Low-interest rate is a stimulator of investment in capital goods necessary for higher output and productivity. Monetary policy rate strongly correlates with interest rates (Sakyi et al, 2017). There is therefore the possibility that relatively high monetary policy rates and hence high interest rates which result in a high cost of doing business could be an obstacle to achieving a lower inflation rate in Ghana.…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Inflation and interest rate dynamics in Ghana: the supply-side perspective

Yemidi,

Nkansa Asante,

Takyi

2023

AJEMS

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PurposeThe purpose of this research is to examine the impact of alterations in the path of monetary policy rates on inflation via the supply side of an emerging economy.Design/methodology/approachThe study employed semi-annual data covering the period 2007S1 to 2020S2 on the inflation rate, the combined outputs of industry and agriculture, the lending rate, and the monetary policy rate. The vector autoregression model was estimated and counterfactual simulation exercises were conducted.FindingsThe study revealed that a move from a higher to a lower monetary policy rate regime resulted in a shift in inflation from a higher to a lower regime. In particular, a 200-basis point reduction in the monetary policy rate over the simulation horizon produces a 1.3% fall in the inflation rate over the same period.Research limitations/implicationsThe study has a limitation due to the unavailability of a long-span dataset on all relevant variables. As a result, it is important to exercise caution when interpreting the study's findings. A potential area for further research is to explore how changes in interest rates impact inflation in the real economy by utilising other multiple-variable time series techniques.Practical implicationsIt is the opinion of the authors that for inflation in Ghana to move to a lower regime, conscious efforts should be made by the monetary authorities to gradually move from a regime of a high monetary policy rate to a lower one.Social implicationsIn particular, a 200-basis point reduction in the MPR over the simulation horizon produces a 1.3% fall in the inflation rate over the same period.Originality/valueThis study enhances the authors' knowledge of how monetary policy can affect inflation in developing countries through the supply-side channel.

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Impact of monetary policy rate on commercial banks' lending rate: empirical evidence from Ghana

Kamasa

Afful

Bentum-Ennin

2023

JEAS

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PurposeThis paper seeks to examine the effect of monetary policy rate (MPR) on the lending rates of commercial banks in Ghana.Design/methodology/approachThe paper employed the autoregressive distributed lag (ARDL) model as well as the non-linear autoregressive distributed lag (NARDL) model econometric techniques on a quarterly time series data from 2002 to 2018.FindingsThe ARDL results revealed that, MPR has a positive and significant effect on lending rate in the long and short run. Although there exists a direct relationship between MPR and lending rate, from the NARDL revealed an asymmetric effect of MPR on lending rate to the effect that, lending rate in Ghana responds more to positive shock (a rise in MPR) compared to a negative shock (a decrease in MPR) both in the long and short run.Originality/valueThe paper contributes to policy and literature in Ghana by providing empirical evidence on the asymmetric effect that MPR has on lending rates in Ghana. The paper recommends among others, the establishment of a rating system of banks according to their monetary policy compliance, where highly rated banks could have for instance a reduction on borrowed reserves from the central bank.

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Inflation Targeting Framework and Interest Rates Transmission in Ghana: An Empirical Investigation

Cited by 4 publications

References 36 publications

A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries

A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries

Inflation and interest rate dynamics in Ghana: the supply-side perspective

Impact of monetary policy rate on commercial banks' lending rate: empirical evidence from Ghana

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