The Bank of Jamaica (BOJ) announced yesterday that the rate offered on overnight placements with the Bank will be reduced by 25 basis points to 3.25%. The Bank noted that the new rate will take effect on November 23, 2017.
This reduction according to the Bank, “reflects its assessment that the inflation outlook for FY2017/18 and FY2018/19 will remain within its medium term inflation target of 4.0 per cent to 6.0 per cent.” The Bank further noted the recent appreciation in the exchange rate has attenuated the upside risks to inflation forecast.” The exchange rate opened the year at $128.44 and has since appreciated 1.48% year to date to close at $126.54 as at November 21, 2017. The outlook by the Bank is reinforced by the Government’s commitment of maintaining primary balance target of 7.0% of GDP.
BOJ highlighted improvements in Jamaica’s key macroeconomic indicators which reflects positive trends as macroeconomic stability is entrenched. The Bank’s expectation for inflations continues to remain in single digits as international reserves continue to grow. The Bank’s current medium term inflation target is 4% to 6%. The inflation rate for the calendar year to date according to the Statistical Institute of Jamaica (STATIN) was 4% and 3% for the fiscal year to date. Net international reserves as at the end of October 2017 amounted to USD$3.08 billion, USD$641.75 million more than the USD$2.44 billion recorded for October 2016. Furthermore, BOJ noted, “the current account of the balance of payments is projected to remain at sustainable levels, market interest rates continue to trend downwards and the fiscal accounts remain strong. This easing in monetary policy will support continued credit expansion and economic growth.”
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