Abstract
The Central Bank monetary policy rate is one of the monetary tools that is use to regulate liquidity in an economy. In Ghana the objectives are to ensure price stability, low inflation and also to support the Government economic objectives including growth and employment. This paper empirically models the monthly monetary policy rates from the year 2001 to 2013 using ARIMA model and the data was obtained from the website of Central Bank of Ghana. From the results, it is reveal that ARIMA(2,1,1) is appropriate for modeling the monetary policy rates of Ghana with a maximum log likelihood value of -133.49, and least AIC value of 274.98, AICc value of 275.25 and BIC value of 287.16. An ARCH LM test and Ljung-Box test on the residuals of the model revealed that the residuals are free from heteroscedasticity and serial correlation respectively. Hence, it is adequate for forecasting the monetary policy rate of Ghana.
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