JMEA Wants BOJ to Do More to Reduce Burden on Businesses & Consumers

The Jamaica Manufacturers and Exporters Association, JMEA, has welcomed last week’s announcement by the Bank of Jamaica of a 25 basis point cut in its policy rate.

The rate offered to deposit taking institutions by the BOJ now stands at 6.75 per cent, down from 7 per cent.

But as we hear from Mahiri Stewart, the JMEA believes the BOJ ought to go further with its efforts to reduce the cost of borrowing for consumers and businesses alike.

Calls for the central bank to ease up on interest rates came from the private sector as far back as January 2023.

There were fears from businesses that the tight monetary policy regime of the BOJ would harm an economy still recovering from the Covid-19 pandemic.

However, in the face of mounting criticism, the BOJ remained resolute.

Speaking at a recent quarterly media briefing, BOJ governor, Richard Byles, sought to make it clear protecting the average Jamaican from rising inflation was more important.

Despite action now being taken by the BOJ to ease its policy, the JMEA remains dissatisfied. In its statement, the private sector group notes that this is the first reduction in nearly three years. 

While this step is a positive sign, the JMEA emphasizes that more aggressive measures are urgently needed to drive a meaningful economic impact.

JMEA president Sydney Thwaites commented that a quarter-point reduction does not sufficiently alter the challenging environment in which businesses operate. 

He’s hoping this move is just the beginning and that further rate cuts will follow urgently.

Mr. Thwaites says the country must see additional reductions sooner rather than later to alleviate pressure on borrowers and restore liquidity in the credit markets.

Echoing similar sentiment, JMEA past-president John Mahfood emphasized the need for swifter action. He says the BOJ’s decision is a small step in the right direction.

However, he says it’s long overdue.  The former JMEA head says the country has seen signs of economic slowdown since February.

Mr. Mahfood says the country needs to see interest rates fall below 5 per cent as quickly as possible.

Sounding the alarm, the former JMEA boss said even at such a rate it will take at least a year for the economy to begin to rebound.

Meanwhile, executive director for JMEA Kamesha Blake, says the industry’s financial challenges were further compounded by the economic repercussions of Hurricane Beryl. 

Ms. Blake says it is now crucial for financial institutions to take a more aggressive approach to providing loans and stimulus packages.