Unfolding the monetary policy rule in Ghana: quantile-based evidence within time-frequency framework

In this paper, we unfold the historical behaviour of monetary authority in Ghana by estimating the policy rule using the standard quantile regression techniques within wavelet multiscale framework. The results generally suggest an overriding bias towards positive inflation gap across time-scales and quantiles. This is an indication of asymmetric (nonlinear) monetary policy reaction function for Ghana. A policy preference for inflation stabilization is clearly conspicuous in the medium-to-long run, consistent with the medium–to-long term policy objective of price stability in Ghana. Nevertheless, policy reaction to positive inflation gap is woefully below the levels stipulated by the Taylor principle even in the long run, surmising broadly accommodative monetary policy rule and by extension a pursuant of flexible inflation targeting regime in Ghana. Our empirical results thus convey important implications for monetary policy implementation and outcomes in Ghana.