Rising Inflation To Affect Interest and Exchange Rates – Economist

Economist, Dr. Ebo Turkson has predicted of dire implications on interest and exchange rates should inflation rise in May.

According to him, this will have a negative impact on businesses and the economy entirely.

“When prices increase generally, our exports become less competitive because our goods are more expensive than formerly. So inflation is not a very good thing because it doesn’t allow businesses to be stable and plan even though it still serves as an incentive for suppliers to increase their supply and others. It also has implications for interest rate and all of that so inflation itself is not something that we would want to be living with,” he said.

Some industry watchers have already indicated of a rising inflation citing recent economic developments.

GN Research, for instance, has predicted that inflation could rise to 13.3 percent in May.

This will be a 3 percentage points up from the 13 percent recorded in April.

Speaking to Citi Business News, Dr. Ebo Turkson, however, advocated a pragmatic intervention to reverse the high import regime.

“But then it is part of our daily lives and therefore what the central bank tries to do at every moment is to try to find ways with which they can control or reduce the inflation expectations. That is why at this stage of most economies, they try to do inflationary targeting because when we are able to reduce the inflationary expectations, it allows businesses to plan, helps you to attract foreign direct investment into the economy,” he added.

Ghana’s inflation rose marginally to 13% in April 2017 after recording declines for some six consecutive times between last quarter of 2016 and March 2017.

The Ghana Statistical Service attributed the development to the increase in transport fares.

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