Bank of Jamaica Signals Tightening in Monetary Policy

• The Bank of Jamaica (BOJ) has announced its decision to hold the policy interest rate, which is the rate offered to deposit-taking institutions on overnight placements with BOJ, unchanged at 0.50% per annum.
• The Bank also decided to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (MPC) in September 2021 and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion.
• While the Bank does not target any specific level of the exchange rate, BOJ will also seek to ensure that movements in the exchange rate do not threaten the inflation target. Monetary policy decisions taken by the BOJ are aimed at ensuring that inflation remains within the Bank’s inflation target of 4.0% to 6.0%.
• These decisions were made by a unanimous vote by the MPC. The decisions were based on the MPC’s assessment that, while inflation is likely to breach the upper bound of the Bank’s target range over the next year, starting from as early as the September 2021 quarter, inflation will gradually decelerate thereafter as the transitory effects of the pandemic fade. Inflation is projected to remain at 5.0% over the medium term, conditional on the gradual tightening of monetary accommodation.

(Source: JIS News)