Policymakers must exercise caution in adjustment of high interest rates – Stephen Amoah

Deputy Minister for Trade and Industry, Dr. Stephen Amoah, has expressed concern over excessive hikes in interest rates and its impact on trade and industry in Ghana.

According to him, these interest hikes have a resultant effect on inflationary pressures which impact the cost of living, particularly for good and services in the sector.

Speaking at the 2023 Financial and Economics Seminar held in Accra on June 28, the deputy trade minister called on policymakers to remain cautious in the adjustment of interest rates.

He argued that adopting such excessive measures to hike interest rates could impact moves to reduce inflationary pressures especially in the domestic economy.

“By repeatedly increasing interest rates in an attempt to curb inflation, we risk exacerbating the challenges faced by trade and industry,” Dr. Amoah cautioned.

He continued, “If the rising cost of doing business, which is one of the main contributors to inflation, is already straining the sector, further interest rate hikes could inadvertently hamper growth and productivity.”

Dr Stephen Amoah further called for the adoption of a nuanced approach to monetary policy measures, with the view of underlying the main causes of inflation.

“Interest rates play a pivotal role in the cost structure of businesses, given the limited availability of equity financing in the country and although it is important to manage our inflationary pressures, there needs to be a holistic understanding of the macroeconomic landscape that is essential to effectively combat inflation,” he explained.

The second edition of the Financial and Economics Seminar was held under theme; 'Impact of socio-economic policies on trade and industries in developing economies' .

The seminar was attended by economists, policymakers, and industry experts to discuss concerns in the domestic economy and recommend solutions required to address them.

MA/FNOQ