Inflation Decreasing; Monetary Policy Crucial For Controlling Inflation

• The Central Bank is reporting that Jamaica’s inflation rate is decreasing. Data from the Statistical Institute of Jamaica (STATIN) show that the rate, which peaked at 11.8% in April 2022, fell to 7.8 % in February 2023.
• Speaking during a Jamaica Information Service ‘Think Tank’ on Wednesday (April 5), Bank of Jamaica (BOJ) Senior Deputy Governor, Dr. Wayne Robinson, said this has resulted from the BOJ’s monetary policy actions, as well as lower imported commodity prices.
• Robinson indicated that “we actually responded very swiftly, early and decisively to the increase that we’ve been seeing which was actually spurred by rising inflation globally”. He further added that “as a result of our policy actions, along with the fact that we have been seeing a lowering of the prices of some international commodities over the past 10 months, we have been seeing a general reduction in the rate of inflation.” Despite the decrease, the BOJ has indicated that 7.8% is still too high, and the utilisation of its monetary policy is crucial in controlling inflation.
• The policy relates to the broad set of actions or tools that the Bank has at its disposal to manage inflation. These have included raising the policy interest rate that the BOJ pays on the current account balances of deposit-taking institutions (DTIs), including commercial banks, building societies and merchant banks; reducing the volume of Jamaican dollar liquidity in the banking system; and stronger intervention to sell US dollars in the foreign exchange market, which, along with the other two actions, have kept the Jamaican dollar stable, thereby limiting the inflationary effect of imported price increases.
• Deputy BOJ Governor, Research and Economic Programming Division and Financial Stability, Robert Stennett, explained how the Central Bank’s monetary policy works. “They can be broken into three broad-based categories; one is interest rates. The Central Bank has the ability to influence interest rates. The second tool is really the ability to control money supply within the financial system, and finally, there is communication, where we keep the stakeholders abreast of our actions,” he outlined.
• The BOJ has reaffirmed its commitment to taking the necessary monetary policy actions to restore inflation to the Government of Jamaica-established target range of 4 to 6%. Inflation is projected to return to this range during the final three months of 2023, between October and December. 

(Source: JIS News)