The Domestic Economy Showed Signs of Recovery During the Quarters Ended December 2021 and March 2022

May 11, 2022


The Financial Policy Committee (FPC), following their meeting of May 6, 2022, and review of the financial performances and risks up to the quarter ended March 2022, issued the Statement dated May 10, 2022, which serves as an update to the FPC’s Statement on the Annual Financial Stability Report dated April 8, 2022.

The highlights are as follows:

  • During the quarters ended December 2021 and March 2022, the domestic economy showed signs of recovery; further improvements are expected during 2022. Inversely, at March 2022, inflation remained above the upper limit of Bank of Jamaica’s (BOJ’s) target range and is expected to remain in breach of the target range over the next 10 to 12 months. This is because of the impact of the Russian invasion of Ukraine and supply chain disruptions on the prices of imported commodities. On this basis, BOJ further tightened monetary policy in the quarter ended March 2022.


  • The monetary policy actions were reflected in a notable contraction in the liquid balances of deposit-taking institutions’ (DTIs) held at the central bank and expansion in money market interest rates. On this basis, interest rates on new loans offered by DTIs rose only marginally over the quarter. However, the expansion in DTIs’ credit to the private sector slowed noticeably for the year ended February 2022 to 6.6% from 7.6% at end-December 2021.


  • The resiliency of financial institutions continued despite tighter financial conditions. DTIs maintained sufficient levels of capital up to February 2022, while other financial indicators such as liquidity and profitability remained relatively strong. “The quality of the overall loan portfolio and that of the household sector in particular, remained healthy, even as the stock of non-performing loans remained well within prudential norms. Systemic risks associated with the financial cycles have moderated, while maturity mismatch and liquidity ratios remained at acceptable levels. In addition, contagion risks within the financial system remained well-managed.”


  • Relative to large macroeconomic and financial shocks, BOJ’s stress tests revealed that the Jamaican financial system remains largely resilient. Concerning interest rate shocks, 2 financial institutions continue to proactively manage their portfolios and are well-capitalized to withstand the potential impact of tightened monetary policy on their balance sheets.



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