May 21, 2024
At its meetings on May 16-17, 2024, the Bank of Jamaica’s Monetary Policy Committee (MPC) decided to keep the policy interest rate at 7.0%, ensure stability in the foreign exchange market, and maintain tight Jamaican dollar liquidity. This decision was influenced by the 5.3% inflation rate from April 2023 to April 2024, which was within the Bank’s target range and lower than expected due to a drop in agricultural food prices. The MPC welcomed the reduction in inflation, which represented the second consecutive month in which annual inflation was within the target range.
Despite the moderation in inflation, the MPC highlighted that inflation risks remain skewed to the upside, with core inflation still high (5.7% at April 2024). Potential risks include wage pressures, high inflation expectations, and possible regulated price increases. External risks, such as higher international oil prices and adverse weather conditions, due to the emerging La Niña weather phenomenon that could result in a more active 2024 hurricane season, also pose a threat. Conversely, weaker global growth could lower inflation.
Inflation is expected to temporarily rise above the target range by the end of June 2024 due to seasonal agricultural price increases, normalization of electricity rates, and higher transport costs following an uptick in international oil prices. However, it should return to the target range for most of the next eight quarters, except for some months in 2025.
The MPC’s future decisions, including potential interest rate reductions, will be influenced by data on wage growth, inflation expectations, and core inflation. The Bank will continue to closely monitor inflation risks.
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