Bank Of Jamaica Pauses Policy Rate Increase

• Consistent with its November 2022 announcement, the Monetary Policy Committee (MPC) has unanimously decided to maintain the policy interest rate at 7.00%, effective 21 December 2022. The MPC also decided to continue containing Jamaican dollar liquidity expansion and maintaining relative stability in the foreign exchange market.
• The MPC’s decision was based on the incoming data being generally favourable for the inflation outlook. Jamaica’s inflation rate at November 2022 of 10.3% was within the range of 9.5% to 10.5% expected by the Bank. Core inflation declined to 8.8% at November 2022 from 9.0% in October 2022.
• The key external drivers of headline inflation, such as grains, fuel and shipping prices, also continued to trend downwards and broadly in line with the Bank’s projections. In addition, as expected, the pace of monetary tightening by the United States Federal Reserve Board (Fed) appeared to be slowing.
• The December 2022 meeting of the MPC also noted that, while interest rates in the money and capital markets have generally increased in line with the policy rate, the response regarding interest rates from deposit-taking institutions has been slow. The Bank anticipates more material increases in deposit and lending rates in early 2023.
• In the absence of new shocks, the MPC noted that its future monetary policy decisions depend on the continued pass-through effect of its past policy rate changes on deposit and loan rates. The decisions also depend on the MPC seeing more pass-through of international commodity price reductions to domestic prices and on the Fed not exceeding its expected policy rate increases. 

(Source: BOJ)