Debate

The following policy proposal is from the Opposition party of Trinidad & Tobago publication: National Economic Transformation Masterplan 2020-2025.

Request the central bank to raise interest rates. We acknowledge monetary policy considerations by the Central Bank are always finely balanced amongst lowering inflation, safeguarding the balance of payments and supporting economic growth. The Ministry of Finance will request the Central Bank to have monetary policy cooperate with fiscal policy as far as possible by raising the repo rate. This will send a signal for the transmission of higher and rising interest rates throughout the financial system including an increase in savings and deposit rates. Higher domestic interest rates will help to limit capital outflows and improve foreign exchange availability. It will also help depositors and pension funds struggling with real negative returns in the low interest rate environment of the past decade.

Is this strategy likely to succeed or fail? Affirmative response