The Jamaica Manufacturers and Exporters Association, JMEA says it is strongly recommending that the Central Bank seriously reconsiders soon, its decision to increase deposit interest rates from 0.5 percent to 1.5 percent.

The association says it strongly disagrees with the decision which took effect last Friday (October 1), calling it misguided.

The Opposition has also said it opposes the move by the Central Bank saying its highly undesirable and that the increase in interest rates will drive up borrowing costs for businesses and consumers, who are already struggling to survive in a very challenging economic environment.

On Friday, the Bank of Jamaica defended the move.

The JMEA in a statement says the BOJ has justified the increase in order to dampen further inflation expectations and to stabilize the exchange rate.

JMEA President John Mahfood says the inflationary increases being experienced by the country are indicative of global shortages, increased transportation cost and logistic challenges which are on going.

In addition, the JMEA says it has been demonstrated in the past that the devaluation of the Jamaican dollar against international currencies has more to do with foreign currency shortages and the level of confidence in the government’s economic policies than adjustments in interest rates.

In this regard, it says it supports the move to maintain satisfactory international reserves and a stable fiscal policy.

The statement adds that the approach of the BOJ is academic and will fail to keep either the exchange rate stable or to moderate the rate of inflation.

The JMEA says the increase in interest rates will debilitate the economy and further impoverish the most vulnerable in the society.

It adds that a move of this nature by the Central Bank will result in higher lending rates to consumers including small manufacturers and exporters affecting their ability to pay their bills and keep staff employed.