November 22, 2023
The Bank of Jamaica’s Monetary Policy Committee (MPC) has decided, unanimously, to maintain the policy interest rate at 7.0%, preserve tight Jamaican dollar liquidity conditions, and ensure stability in the foreign exchange market. This decision is based on the MPC’s assessment that, although October 2023 inflation is within the target range, it is expected to exceed the range from December 2023 to March 2025. The MPC acknowledges downside risks, including fiscal measures to counteract inflation, stable core inflation, and the possibility of the US Federal Reserve maintaining its policy rate.
Headline inflation in October 2023 fell to 5.1%, below September 2023 and the peak in April 2022. Core inflation, excluding food and fuel, was 5.7%, lower than April 2022. The projected inflation acceleration is attributed to increased public passenger vehicle fares and elevated oil prices, while international grain prices are expected to fall, and shipping prices to remain stable.
Downside risks to the inflation outlook include potential fiscal measures and lower-than-expected oil prices, while upside risks include higher wage adjustments, second-round effects from fare increases, domestic agricultural price inflation, and worsening supply chain conditions.
Future monetary policy decisions hinge on data related to these risks, with the MPC committed to using available tools, including further tightening, if emerging upside risks materialize. The Bank will closely monitor the global and domestic economic environments for potential risks to Jamaica’s inflation rate.
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