October 1, 2024
The Bank of Jamaica’s (BOJ) Monetary Policy Committee (MPC) decided, at its meetings on 26 and 27 September 2024, to lower the policy rate by 25 basis points to 6.50% per annum, effective 01 October 2024, and manage domestic liquidity accordingly. The MPC will also continue to ensure stability in the foreign exchange market. This decision to ease monetary policy was influenced by an improved inflation outlook.
In August 2024, annual headline inflation was 6.5%, higher than July’s 5.1% and above the Bank’s target range of 4.0% to 6.0%, although core inflation (excluding agricultural food and fuel prices) remained at 4.3%. The Bank expects headline inflation to return to its target range sooner than previously forecast, aided by lower-than-expected impacts of Hurricane Beryl on agricultural supplies and declining international commodity prices. Additionally, domestic demand and wage pressures are moderating due to past monetary policies.
Inflation is expected to remain above the target for the next two to three months, but long-term expectations suggest it will stabilize within the Bank’s range. However, hurricane season poses a risk to this forecast. Future interest rate adjustments will be gradual and dependent on economic data, and the MPC is reviewing its monetary policy tools to improve their effectiveness.
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