Inflation Expectation Survey Reveals Businesses Expect 6.0% Point to Point Inflation for December 2021

• The March 2021 survey indicated expected point-to-point inflation of 6.0% as at December 2021, which is higher than the March 2021 outturn of 5.2% and at the upper end of the BOJ target range. The expected inflation 12 months ahead fell to 6.5% from 7.2% in the previous survey.
• The perception of inflation control worsened in the March 2021 survey relative to the December 2020 survey. This was largely due to a decline in the proportion of respondents who were “satisfied”, and an increase in the proportion of respondents who were “dissatisfied” with how inflation is being controlled.
• Respondents anticipate that the currency will depreciate over the 3-month, 6-month, and 12- month time horizons at a faster pace relative to the previous survey, as activity in the domestic tourism industry remains depressed, limiting the supply of US dollars. US dollar supplies are not expected to improve significantly until a stronger rebound in the tourism industry begin to boost the Jamaican dollar.
• The majority of respondents continued to believe that the Bank’s policy rate will remain the same over the next three months, as the BOJ maintains that inflation will remain within in target over the next 12-months and that market interest rates will remain attractive - making it cheaper for households and businesses to finance their spending and investing activities. This should help to support growth.
• The Present Business Conditions Index improved while the Future Business Conditions Index worsened reflecting a lower level of optimism compared to the previous survey.

(Source: BOJ & NCBCM Research)