September 30, 2025
At its meetings held on September 25 and 26, 2025, the Bank of Jamaica’s Monetary Policy Committee (MPC) unanimously decided to maintain the policy interest rate at 5.75 per cent per annum. This decision reflects the Committee’s view that the current monetary policy stance is appropriate to support inflation’s return to the target range of 4.0 to 6.0 per cent, despite headline inflation falling to 1.2 per cent in August 2025, below the lower bound of the target. Notably, core inflation, which excludes volatile items such as food and fuel, was 4.2 per cent, remaining within the target range since March 2025.
The decline in headline inflation was attributed to temporary supply-side factors, including lower agricultural prices following recovery from Hurricane Beryl, the waning impact of previous public transport fare increases, and the reduction in the General Consumption Tax (GCT) on electricity implemented in March 2025. These factors are considered transitory and not indicative of underlying demand conditions. The MPC highlighted that risks to the inflation outlook are tilted to the upside, citing potential external shocks such as increased tariffs on U.S. trading partners and geopolitical tensions that could disrupt supply chains and elevate imported inflation.
On the domestic front, the Jamaican economy continues to show resilience. Real GDP growth for the September 2025 quarter is estimated between 3.0 to 4.0 per cent, driven by expansions in agriculture, tourism, and utilities. Labour market conditions remain tight, with anecdotal evidence of elevated wage growth. Over the medium term, economic activity is expected to strengthen, with GDP growth for FY2025/26 projected in the range of 1.0 to 3.0 per cent, supported by agriculture, mining, and tourism.
Internationally, inflation in the United States rose to 2.9 per cent in August 2025, above the Federal Reserve’s target. In response, the Fed reduced its policy rate by 25 basis points, citing increased downside risks to employment and signs of moderating economic growth. Commodity prices, including oil, LNG, and grains, generally declined during July and August, although fertilizer prices increased. These developments have implications for Jamaica’s inflation trajectory and external trade dynamics.
The BOJ also noted that the current account of the balance of payments is projected to remain in surplus, and international reserves are healthy and expected to improve further. The widening differential between domestic and external interest rates, due to declining rates abroad, is expected to support foreign exchange market stability. The domestic banking system remains sound, with adequate capital and liquidity, and fiscal policy is not expected to pose inflationary risks in the near term.
Looking ahead, headline inflation is expected to remain below the target range for the remainder of 2025 but should return to within range by March 2026, as temporary disinflationary factors dissipate. The MPC reaffirmed its commitment to maintaining low and stable inflation and will continue to monitor incoming data, particularly the trajectory of core inflation, and adjust its policy stance, as necessary. The next monetary policy decision is scheduled for November 20, 2025.
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