The increase in the primary reserve requirement of banks from 12% to 13% took effect from today, September 1st, 2022.
This follows additional measures by the Monetary Policy Committee of the Bank of Ghana to help address the rising inflation and the fast depreciation of the cedi, which has since stabilise against the major foreign currencies.
Again, on October 1st, 2022, the primary reserve requirement of banks will go up to 14% and subsequently to 15% on November 1st, 2022.
The increase in the reserve requirement automatically reduces the volume of deposits, money stock and raises the cost of credit.
This ensures that there is inadequate money in circulation to cause inflation.
The move, many analysts believe slows down the economy as most businesses are not able to borrow much to spend and expand their operations.
Again, household consumers are also unable to borrow to spend, and consequently enhance their living.
Source: Ghana News