Lower Policy Interest Rate is Expected

May 3, 2023


The Jamaica Employers’ Federation (JEF) President, David Wan, is expecting the Central Bank to lower the policy interest rate on deposit-taking institutions’ overnight placements following the latest inflation rate out-turn, which is within touching distance of the Bank of Jamaica’s (BOJ’s) target range of 4% to 6%.

This perspective is in line with predictions made by the global consensus for commodity and shipping prices to fall and takes into account the Bank’s overall monetary policy stance.

The JEF President predicts that the Central Bank will drop the policy rate by half a percentage point at the next MPC meeting. He also praises the authorities for engineering foreign exchange stabilisation and appreciation, which has served to temper inflation. Additionally, a “loosening up” of the global supply chain, which was largely crippled by the pandemic, is driving down inflation.

BOJ’s Deputy Governor, Dr. Wayne Robinson, has indicated that due to the Bank’s policy actions, inflation has been reduced over the past 10 months. Inflation is projected to return to the target range during the final three months of 2023, between October and December. However, there are risks to this projection, such as global oil prices, labour market conditions, and natural disasters.

The BOJ remains cautiously confident that inflation will continue to trend in the right direction and that it should converge to the target by the end of the year.



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