The Bank of Ghana (BoG) drained a record GH₵389.1 billion in excess liquidity from the financial system in the first quarter of 2026, the highest sterilisation volume in at least six years, as falling yields and the government’s selective borrowing strategy left large volumes of cash unabsorbed in the market, according to a quarterly insight by Black Star Brokerage.
The scale of intervention grew steadily across the quarter. The central bank absorbed GH₵112.5 billion in January, GH₵121.2 billion in February, and GH₵155.4 billion in March, with the final month representing the single largest monthly mop-up in the review period.
The build-up of liquidity coincides with a sharp compression in domestic yields. Treasury bill rates fell into single digits for the first time since Ghana’s debt crisis, with the 91-day bill settling at approximately 4.8 percent, the 182-day at 6.6 percent, and the 364-day at 9.8 percent. Government bond yields across the broader market fell from above 22 percent in March 2025 to a range of roughly 10 to 13 percent a year later.
Government borrowing strategy has directly contributed to this compression. During the first quarter, the Treasury rejected approximately GH₵59.97 billion in bids at primary auctions, accepting GH₵104.1 billion of the GH₵164.1 billion tendered. By limiting acceptance at higher rates, the government suppressed borrowing costs, but the funds that would ordinarily have been absorbed through securities issuance remained in the system.
Investor behaviour has adjusted in response. Demand shifted toward longer-dated instruments, with accepted volumes for 364-day bills rising to GH₵36.6 billion in the quarter compared with GH₵23.9 billion for 182-day bills, reflecting efforts to lock in yields ahead of anticipated further declines. At the same time, participation at primary auctions weakened, with monthly acceptance falling to approximately GH₵20.6 billion in March from higher levels earlier in the quarter.
Secondary market activity partially absorbed the overhang. Trading volumes in bills and fixed-income instruments rose to approximately GH₵35.8 billion in March, up from GH₵20.2 billion for the same period a year earlier.
The macroeconomic backdrop has supported the easing cycle. Inflation fell to 3.2 percent in March 2026, enabling the BoG to cut its benchmark policy rate by 400 basis points to 14 percent during the quarter. However, services inflation remained at approximately 7.2 percent and housing-related costs stayed elevated, pointing to divergence between headline and underlying price pressures.
Ghana’s economy is projected to grow 5.5 percent in 2026, a modest step down from 5.8 percent in 2025. The cedi depreciated 4.4 percent against the US dollar in the first quarter, an improvement on recent years but still reflective of underlying external pressures.
The Ghana Stock Exchange (GSE) Composite Index posted strong gains in the quarter, partly driven by capital reallocation away from lower-yielding government securities.
Looking ahead, inflation is forecast to rise to between 7.5 and 8.5 percent by year-end, while the policy rate is expected to stabilise within a 10 to 14 percent range. The central bank’s ability to manage liquidity without destabilising the foreign exchange market will remain a key test for monetary policy in the months ahead.
