Date: March 27, 2019
Bank of Jamaica announces its decision to lower the policy interest rate (the rate offered on overnight balances1 at Bank of Jamaica) by 25 basis points to 1.25 per cent.
The decision to lower the policy rate is aimed at supporting inflation returning to and remaining on target (4.0 per cent to 6.0 per cent) by December 2020. The rate reduction is intended to stimulate an even faster expansion in private sector credit which should lead to higher economic activity, consistent with the inflation target.
At Bank of Jamaica’s last assessment in February 2019, inflation was projected to fall below the target at several points over the next year before slowly approaching the midpoint of the target over the medium term. In the near term (that is, over the next eight quarters), the key sources of upward price pressure were expected to emanate from (1) increases in domestic agriculture prices to more normal levels, (2) some imported inflation caused by a moderate increase in crude oil prices and (3) an improvement in domestic demand conditions resulting from Bank of Jamaica’s accommodative monetary policy stance over the past 18 months. The risks to the forecast were assessed to be balanced.
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