BOJ Cuts Policy Rate Again

The Bank of Jamaica, BOJ, has cut its policy rate for the third straight time as inflationary pressures ease in the country.

The BOJ’s policy rate is the interest rate paid on overnight deposits held by deposit‐taking institutions at the central bank.

In its latest monetary policy decision, the BOJ has reduced the rate by 25 basis points, down to 6.25 per cent. It follows meetings of its Monetary Policy Committee on November 19 and 20. 

Chevon Campbell tells us more.

The BOJ says the decision of the Monetary Policy Committee to ease monetary policy further is based on an improvement in the inflation outlook.

It says following the temporary impact of Hurricane Beryl on prices, inflation is becoming more anchored in the bank’s target range. 

Annual headline inflation at October 2024, as reported by the Statistical Institute of Jamaica, was 4.9 per cent. This is lower than the 5.7 per cent at September 2024. 

This outturn was also lower than the most recent forecast and was within the bank’s target range of 4 to 6 per cent. 

The central bank says core inflation, which excludes the prices of agricultural food products and fuel, was 4.5 per cent at October 2024. This represents the sixteenth consecutive month that core inflation was below 6 per cent.

The BOJ says inflation is projected to remain broadly within the bank’s target range over the next two years.  It says the private sector’s expectations about the level of future inflation are also gradually trending down. 

However, the BOJ warns that uncertainty related to potential economic policy changes among Jamaica’s main trading partners could have adverse implications for investment and remittance inflows, as well as inflation expectations. 

Higher inflation could also result from further escalation in geopolitical tensions, which could negatively impact international supply chains.