Latest News

BOJ lowers policy rate

Thursday, May 17, 2018

Print this page Email A Friend!

KINGSTON, Jamaica — The Bank of Jamaica (BOJ) has announced its decision to lower the policy interest rate (the rate offered on overnight deposits with Bank of Jamaica) by 25 basis points to 2.50 per cent.

It said this policy stance reflects the bank's assessment of inflation for the next four quarters and beyond.

The bank's assessment is that inflation over the next three quarters will fall slightly below the lower end of the Bank's target of 4.0 per cent to 6.0 per cent, before increasing towards the centre of the target in the following quarter.

According to a release from the bank yesterday, the projected trajectory for inflation over the next four quarters primarily reflects the impact of the large fall in agricultural food prices, and consequently the CPI, in the March 2018 quarter.

It said that Inflation over this period will also be affected by increases in crude oil prices. The medium term outlook for inflation, however, continues to reflect a sluggish recovery in the real economy, even as projections show a modest acceleration in economic growth.

The release further explained that domestic demand is also expected to remain restrained by continued fiscal consolidation.

Inflation expectations remain low and broadly anchored around the bank's target.

BOJ added that the risks to the inflation forecast are assessed to be skewed to the downside.

“The major downside risks to inflation include weaker than anticipated domestic demand conditions and slower than anticipated global economic growth stemming from geo-political tensions and protectionist policies.

“One upside risk to inflation is higher than anticipated commodity prices, particularly the price of crude oil. The risk of adverse weather may also cause domestic agricultural prices to rise faster than anticipated,” the bank contended.

BOJ added that the decision to maintain an accommodative policy stance is aimed at supporting further credit expansion and faster GDP growth.

“When adjusted for expected inflation, the policy rate remains negative in real terms in a context of high liquidity in financial markets. These conditions are considered to be appropriate at this time given the weaker-than-desirable pace of credit expansion.

“This decision is made against the background of positive macroeconomic indicators."

It said net international reserves are increasing and the current account of the balance of payments, while projected to widen, will remain at sustainable levels.

Market interest rates are at record lows and falling and fiscal performance continues to be strong, it ended.

Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at




1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed:

6. If readers wish to report offensive comments, suggest a correction or share a story then please email:

7. Lastly, read our Terms and Conditions and Privacy Policy

comments powered by Disqus



Today's Cartoon

Click image to view full size editorial cartoon