Effective today, August 25, 2017, The Bank of Jamaica (BOJ) has advised the public of a reduction in its policy interest rate by 25 basis point from 3.75% to 3.50%. The rate is offered on overnight placements with the Bank.
This amendment according to the BOJ, “reflects the Bank’s assessment that inflation will be within BOJ’s inflation target of 4% to 6% for the fiscal year 2017/18.” Other key macroeconomic indicators have been reflecting generally positive trends according to the Bank. Inflation expectations survey conducted for the month of June 2017 reflected a rate of 2%, firmly anchored in single digits. The Nations main economic indicators continue to improve amid a strong reform programme and favourable environment as per the release. International reserves for the month ended July 2017 improved from US$2.62 billion in June 2017 to US$2.74 billion (July 2016: US$2.39 billion) which has increased month over month and year over year. The BOJ noted that, “the current account of the balance of payments is projected to remain at a sustainable level, private sector credit is expanding strongly and market interest rates have been trending downwards.”
The Government’s commitment to maintaining a 7% primary surplus for the fiscal year and meeting overall public sector fiscal targets under the precautionary Stand-By Agreement with the IMF further strengthens BOJ’s outlook. According to the Ministry of Finance & the Public Service in the Central Government Operation Tables, the primary surplus for the fiscal year to date was $30.64 billion as at the end of June 2017, compared to a budgeted figure of $24.43 billion. additionally the tight fiscal policy according to the Bank backs “further easing in monetary conditions.”
Notably, Brian Wynter, Governor of The Bank of Jamaica (BOJ), expressed at the Bank’s quarter press briefing: “In the type of economy we are building, one led by the export of goods and services and competitive import-substitution, the private sector engine of growth is lubricated by credit. Many private sector entities are already on their way hence the positive economic numbers but we must push forward with the financial reform agenda to allow other to join them.”
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