Monetary Policy Transparency in Ghana: Recent Evidence

Monetary policy involves a dual role as central banks must not only be a heedful observer of outcomes but must also be able to shape the outcomes. In view of this, greater policy transparency has been endorsed to boost credibility, effectiveness and flexibility of monetary policy. With more than a decade of practicing of fully-fledged IT regime, it is of paramount interest to ascertain the pace of policy transparency in Ghana. Consequently, this paper determines the extent of policy transparency in Bank of Ghana, utilizing both methodologies of Dincer and Eichengreen (2008) and Al-Mashat and others (2018). The application of the two transparency measures reveals that policy transparency environment of Bank of Ghana (BOG) has indeed improved since 2009. Our score suggests that monetary policy in Ghana is 41% -57% transparent as at end 2018. The relatively moderate score for BOG emanated largely from low level of transparency about its policy framework (FPAS model) and the procedural policy processes. To further boost transparency, BOG is required to increase transparency in the documentation and publication of the Bank’s core quarterly projection model, as well as evaluating and publishing how each decision on policy instrument or target are attained. Publication of other core variables (aside inflation) in the baseline forecasts and regular external evaluation of the policy framework along with public disclosure of the findings are necessary to boost policy transparency.