Excessive interest rate hikes negatively affecting trade and industry – Stephen Amoah

Deputy Minister for Trade and Industry, Dr. Stephen Amoah, has raised concerns about the potential negative impact of excessive interest rate hikes on trade and industry, particularly in light of the persistent inflationary pressures experienced in the country.

Dr. Amoah urged policymakers to exercise caution when adjusting interest rates, as their strategy could inadvertently worsen the goal of reducing inflation.

Addressing an audience of economists, policymakers, and industry experts at the 2023 Financial and Economics Seminar, Dr. Amoah highlighted the need for a nuanced approach to monetary policy, taking into account the underlying causes of inflation.

Drawing attention to the cost-push factors driving inflation in Ghana, he emphasized the pivotal role of interest rates in the cost structure of businesses, given the limited availability of equity financing in the country.

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

“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.”

The Deputy Minister stressed that a holistic understanding of the macroeconomic landscape is essential to effectively combat inflation.

While acknowledging the importance of managing inflationary pressures, Dr. Amoah advocated for a balanced approach that considers the potential adverse effects on trade and industry.

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