Consumers Unlikely to Immediately Feel Effects of Lower Interest Rates – Economist

Economist Keenan Falconer says consumers are unlikely to experience immediate benefits from the Bank of Jamaica’s recent decision to lower its interest rate by 25 basis points, bringing it to 6.5 per cent.

The reduction took effect on October 1.

Speaking during Nationwide at Five on Tuesday, Mr. Falconer explained that the impact of the rate cut may take six to nine months to materialise.

Mr. Falconer acknowledges that the reduction is a positive step for the economy, But he says there’s need for stronger consumer advocacy, as the effects often do not reach the average consumer.

Keenan Falconer, economist.

The BOJ, in announcing the decision, says it anticipates point-to-point inflation to fall back within the target range of four to six percent over the next eight quarters. As of the end of July, inflation was 6.5 per cent.

The BOJ says it expects this to settle within the BOJ’s target range over the forecast horizon, with the exception of the next two to three months. 

Meanwhile, president of the Jamaica Manufacturers and Exporters Association, JMEA, Sydney Thwaites, says the association is pushing for the benefits of these rate cuts to be passed on to consumers.

Sydney Thwaites, president of the JMEA.