Bank of Jamaica increases Benchmark Interest Rate to 4.50%

• The Bank of Jamaica (BOJ) announced that effective 30 March 2022, the rate offered on overnight balances on the current accounts of deposit-taking institutions, the policy rate, will be increased to 4.50 % per annum from 4.00% per annum. 
• At its meetings on March 25 and 28, 2022, the Bank’s monetary policy committee (MPC) noted that inflation continued to breach the upper limit of the its target range in February 2022. Importantly, the bank expects inflation to continue to breach the target range for a more extended period and at higher rates than previously anticipated. 
• The invasion of Ukraine by Russia has increased the level of uncertainty in the environment and has resulted in upward pressure on international commodity prices which have contributed to a further rise in domestic inflation and inflation expectations. 
• Along with the policy rate, the committee also decided to continue pursuing other measures, such as FX interventions, to contain Jamaican dollar liquidity expansion and maintain relative stability in the foreign exchange market. 
• In light of the increase in interest rates on deposits and loans, liquidity conditions are expected to remain tight, thus making saving in Jamaican dollars more attractive relative to foreign currency assets and borrowing in Jamaican dollars more expensive.

(Source: Bank of Jamaica)