An Economist Dr. Ebo Turckson has called on government to put in place measures to minimize the impact of a hike in US Federal Reserve rates on the Ghanaian economy.
[contextly_sidebar id=”cR1XZwlVPCR4TOhE5gplUk6kV5eV9lYJ”]According to the Dr. Ebo Turckson the hike will divert investments meant for the Ghanaian markets to the US which will in turn increase US financial assets.
Chairman of the US Federal Reserve Janet Yellen has hinted the reserve may increase the rates by the end of the year, though it maintained the rates last month, in part due to fears that it will have a negative impact on global economic growth.
In an interview with Citi Business News economist and senior lecturer at the University of Ghana Dr. Ebo Turckson warned of high interest on bonds and loans if the US FED increase their rates.
“Once the fed increases the rate the immediate impact would be that investible resources, in terms of financial assets in the US will increase in terms of the returns and which has two implications for Ghana as a developing country. One, any loan we contract from the US market will have to attract very high interest rates which will push up interest rates on US financial resources.
Two, it will also divert potential financial resources meant for the Ghanaian market to the US economy which will make the US dollar stronger relative to other currencies which means the cedi will depreciate.”
Dr. Ebo Turckson insisted that ‘not until we put in place measures to minimize the impact of the rates of that potential push by the US fed rates we are likely to see the cedi depreciate badly’.
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By: Norvan Acquah – Hayford/citifmonline.com/Ghana