Finance Minister Dr Nigel Clarke says failure to aggressively tackle inflation could lead to economic ruin.
He made the comment in relation to the Bank of Jamaica’s move to further increase interest rates despite the continued concern raised by members of the private sector.
While conceding that the hikes could affect growth, Dr Clarke says it’s a necessary trade off for long term prosperity.
Chevon Campbell tells us more.
Dr Clarke says while the current high prices on the world market will pass, the damage done by inflation is long term.
He says it’s absolutely necessary to avoid an everlasting spiral.
Point-to-point Inflation currently stands at 10-point-9 per cent.
This is well above the four to six per cent range the Bank of Jamaica is called on to maintain.
In a move to bring it under control, the Bank of Jamaica has hiked interest rates moving from 0.50 per cent in August of last year to now stand at 5.50 per cent.
It’s a decision that the Jamaica Manufacturers and Exporters Association has called irresponsible.
JMEA President, John Mahfood, says this decision has already had a negative impact on lending and mortgage prices.
However, Dr Clarke says this aggressive movement is necessary to avoid economic ruin.
The finance minister admits that this will have an impact on growth but if inflation is left unchecked the outcome will be several magnitudes worse.