BOJ Says Macroeconomic Conditions Improved Up To March

• The Bank of Jamaica's Financial Policy Committee says local macroeconomic conditions improved up to March this year. The committee which met on Wednesday, July 5, says this was reflected in moderate improvements in the composite indices of financial conditions.
• The Central Bank also said systemic risks associated with financial cycles and the system's exposure to other financial actors were moderate.  
• Data up to the end of March indicated that financial institutions remain adequately capitalized and profitable.
• Several positive domestic and external macroeconomic developments supported the stability of the financial system for the March 2023 quarter. The Jamaican economy grew by 4.2% for the quarter and reflected growth in most economic sectors.  Furthermore, the annual point-to-point inflation rate for Jamaica decelerated to 6.2% at the end of March 2023, which was below the outturn of 9.4% recorded at end of 2022. Likewise, in the United States, inflation trended downwards to 5.0% at March 2023, relative to 6.5% at end of 2022.
• Concurrently, during the quarter, the Bank of Jamaica maintained its decision to hold its policy interest rate at 7.0% while the Federal Reserve of the United States (FED) slowed its pace of interest rate increase.
• The Financial Policy Committee also says its stress test of the system shows that the deposit-taking institutions and securities dealers are resilient to the risks, where interest rate risk and credit risk shocks were considered.
• The committee found, however, that there are still vulnerabilities to further increases in interest rates, which would need to be remedied by additional capital injections. The stress test looks at the balance sheets of domestic financial institutions.

(Sources: BOJ and RJR)