ACCRA, Dec. 23 (Xinhua) -- The hike by the United States (US) Federal Reserve (Fed) in its interest rate has the potential to affect rates in many other markets globally, Seth Terkper, Finance Minister for Ghana has said.
Terkper , an economist and Chartered accountant noted that any decision the U.S. arrives at has both domestic and global implications.
"The US Federal Reserve, of course it is a preeminent central bank, globally, and their decision, given the position of the US as the strongest economy, the role of the dollar and the role of the US financial market which have very long global reach, it implies that any decision they make has both domestic and international ramifications," Terkper said in an interview with Xinhua on Thurday.
The Fed raised its key interest rate this month by a quarter point, from a range of 0.25 to 0.5 percent to a range of 0.5 to 0.75 percent.
"There is a reverse flow when interest rates begin to go up in the advanced economies, particularly the US. This is therefore why their rate is watched very carefully, because it then has ramifications for other rates," the Finance Minister explained.
The minister was not sure however of a direct correlation between the US Fed decision and the Eurobond Market; and if there is a reverse flow of funds into the US and advanced economies, then other economies need to do well, in order to have favorable terms in their Eurobond ventures.
"Domestic factors matter and so if your domestic factors are not as strong or regional market or emerging markets are not as strong then you may see a direct correlation," the official said.
