• The Bank of England (BoE) on Thursday imposed back-to-back interest rate hikes for the first time since 2004 and began the process of quantitative tightening. 
• Markets had broadly expected the 25 basis point rate increase, which the Monetary Policy Committee voted for 5-4 and which takes the main Bank Rate to 0.5%, as the central bank strives to contain soaring inflation. Four members voted to increase rates by 50 basis points to 0.75%. 
• The Bank fired the starting gun on rate rises in December, hiking its main interest rate to 0.25% from its historic low of 0.1%. Since then, data has shown U.K. inflation soared to a 30-year high in December as higher energy costs, resurgent demand and supply chain issues continued to drive up consumer prices. 
• The BoE on Thursday also raised its inflation forecast to an April peak of 7.25% from the 6% projected in its December report. 
• The BoE stuck with past guidance to the market to expect quantitative tightening once the Bank Rate reached 0.5%, reducing its government and corporate bond purchase target by ceasing to reinvest maturing assets. A program of corporate bond sales is set to be completed no earlier than late 2023, which would fully unwind the central bank’s stock of corporate bond purchases. 
• In its report, the MPC said any further tightening of monetary policy will depend on the medium-term prospects for inflation.

(Source: CNBC News)

• The International Monetary Fund’s Managing Director Kristalina Georgieva said it was too early to say if the world was facing a period of sustained inflation, but warned that failure to make economies more resilient to future shocks could lead to big problems. 
• Global policymakers need to carefully calibrate their fiscal and monetary policies in 2022 to factor in varying country-specific conditions, including inflation and the space for additional fiscal support. 
• Unlike the first year of the pandemic in 2020, when finance ministers and central bankers coordinated and synchronized their actions, circumstances varied widely now across the world, and that required more specificity in responses. 
• Georgieva said the COVID-19 pandemic remained the biggest risk facing the global economy, and it was imperative to step up efforts to increase vaccination rates in low-income countries, and meet a global target of vaccinating 70% of people in countries around the world by mid-2022.

(Source: Reuters)

• Permanent Secretary in the Ministry of Tourism, Jennifer Griffith, says 90 per cent of all planned tourism investments remain on track despite the impact of the COVID-19 pandemic. There are currently more than a dozen hotel development projects in progress throughout the different areas of the island. 
• The Government has been undertaking its share of investment in the sector, and is spending billions of dollars to invest in the expansion and rehabilitation of our tourism infrastructure. “This includes improvements to the island’s two major airports and the development of beach facilities, among many other projects,” the Permanent Secretary explained. 
• Moreover, the GOJ is investing in its people as it seeks to drive community tourism experiences that bring the economic benefit of tourism directly into communities around Jamaica. By providing communities with investment opportunities, stakeholders are allowed to expand their local businesses and trade, which will lead to a more resilient tourism sector. 
• These investment projects will aid in the rebound of the tourism sector, which is currently projected to surpass pre-pandemic levels by 2024. It will also support the sector’s contribution to economic growth as the export of services, especially tourism products, will be the main driver of the projected 4.2% growth in the economy in 2022.

(Source: JIS & NCBCM Research)

• The Caribbean Development Bank (CDB) is projecting gross domestic product (GDP) growth of 9.1% across its 19 Borrowing Member Countries (BMCs) in 2022, accelerating the region’s economic recovery, which started in 2021. 
• The favourable outlook is anchored by an expected surge in the GDP of commodity-exporting economies by an estimated 17.5% on account of strong growth in Guyana (47.5%), emanating from increased oil and gas production, and a resurgence in energy production in Trinidad and Tobago as supply-side constraints are alleviated. Higher international prices for crude oil should translate into revenue windfall. 
• Service-exporting BMCs are forecasted to gain momentum, growing at an average rate of 4.8%, reflecting the continued inflow of international visitors. It is anticipated that this rebound is likely to strengthen during 2022 as restrictions ease, on account of strengthened protective health measures. However, the return of international passenger arrivals will depend on the acceleration of vaccination rates; effective management of the pandemic without resorting to full and lengthy lockdowns; and continued confidence in protocols established for safe travel to the region. 
• “A key lesson from the impact of the pandemic is that those countries entering the pandemic on a strong macro-fiscal footing fared better in weathering the headwinds. As such, countries are redoubling efforts to achieve debt sustainability despite extant challenges. Others are doing so outside of supported programmes but have established explicit fiscal anchors to function as platforms for macroeconomic policy frameworks.” said CDB Director of Economics Ian Durant.

(Source: CDB)

• The Caribbean Hotel and Tourism Association (CHTA) recommends a concerted effort by Caribbean government and private sector leaders to boost intra-regional travel, while fostering greater parity, clarity and consistency for travel noting the loss of over US$1 billion in 2021 due to a stagnation in travel between the region’s destinations. 
• President Nicola Madden-Greig, asserted that while international travel to the region has rebounded to 75% of pre-pandemic levels, intra-regional business and leisure travel has dropped to around 30%, with smaller Caribbean economies and small businesses hit particularly hard. 
• In an effort to revitalize sluggish local economies the CHTA has taken several steps including; increasing services to revive regional air travel, reducing COVID-19 testing costs, cutting testing time, and shrinking long isolation periods. The Association also made recommendations for an air travel tax/fee holiday or reduction. This recommendation is similar to that which was proposed to Caribbean leaders by Antigua and Barbuda’s Prime Minister, who is leading by example with fee reductions for his country. 
• Additionally, more uniform and consistent regional travel protocols would reduce traveler uncertainty, while health safety diligence and increased vaccinations were key to speeding up the return of local festivals and events, which are key elements of intra-regional travel. 
• Stimulating intra-regional travel would influence higher local spending, boost trade in local goods and services, increase government revenues and revitalize local economies. However, cost is a factor, an initiative by Caribbean leaders to lower travel fees or taxes, which amounts to almost 50% of ticket fee, would lead to greater intra-regional travel. Currently, it is more expensive to travel within the region despite the pandemic which led to a reduction in overall travel expense.

(Source: Barbados Today)

• Euro-area inflation unexpectedly accelerated to a record, overshooting expectations by the most in at least two decades and fueling bets the European Central Bank could raise interest rates earlier than expected. 
• Consumer prices jumped 5.1% YoY, up from 0.9% in January 2021 and 5% in December. The median estimate in a Bloomberg poll of 44 economists saw a reading of only 4.4% and none predicted inflation gaining pace. 
• Money markets now see the ECB lifting rates by 10 basis points by July, rather than by September. The euro extended its advance, climbing 0.4% against the dollar to $1.1315. 
• While slowing in Germany and France, the euro zone’s two biggest economies, the spike in energy costs pulled price growth higher across the 19-member currency bloc as a whole. It was more than a percentage point higher than analysts predicted in Italy, where it accelerated to 5.3%. Stripping out energy and other volatile components like food, core inflation was 2.3%, down from last month’s 2.6% reading. 
• Wednesday’s data come as ECB officials gather to discuss monetary policy against a backdrop of increasingly aggressive tightening by the Federal Reserve and with the Bank of England primed to lift interest rates for a second time in three months.

(Source: Bloomberg)

• Bank of Canada Governor Tiff Macklem said on Wednesday that there was uncertainty about how quickly inflation would come back down due to the unique nature of the COVID-19 pandemic, which has helped to drive up prices. 
• He reiterated that interest rates would have to start going up this year to tackle inflation, which is currently 4.8%, more than double the central bank's 2.0% target. With labour markets tightening and evidence of capacity pressures increasing, rate rises are essential. 
• The bank said last week the economy no longer needed help to deal with the effects of the COVID-19 pandemic, but kept rates steady at a record low 0.25%. The Governor expressed confidence that inflation will come down, further stating that it will peak at about 5.0% in the first half of 2022 before starting to decrease.

(Source: Reuters)

• Jamaica will see 4.2% real GDP growth in 2022, up from an estimated 4.1% in 2021, as a stronger tourism rebound will drive services exports and private consumption, according to forecasts from Fitch Solutions. 
• It had revised its 2021 estimate from 4.6% previously, as a spike in COVID-19 cases in the summer led to lockdowns that slowed the recovery in tourism, holding total visitor arrivals to only 32.3% of 2019 levels in the year through October. 
• Nevertheless, it is estimated that private consumption saw solid growth, supported by a record spike in remittances to US$3.4Bn (24.6% of GDP) and US$24.0Mn (0.2% of GDP) in stimulus spending from the government CARE programme, which disbursed one-off cash transfers to vulnerable members of the population in the final months of 2021. 
• Going forward, exports are expected to grow by 10.1% in 2022 as declining cases of COVID-19 in key source markets will support tourism inflows to Jamaica, though the pace will slow from an estimated 16.8% in 2021 due to less favourable base effects.

(Source: Fitch Solutions)

• United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) in their annual report reveals that extreme poverty in the region has risen significantly due to the coronavirus pandemic. 
• The health crisis is still ongoing, and Latin America and the Caribbean is the world’s most vulnerable region in this pandemic,” said ECLAC, adding that, as a result of the prolonged health and social crisis stemming from the COVID-19 pandemic, the extreme poverty rate in the region has risen from 13.1% of the population in 2020 to 13.8% in 2021. 
• According to ECLAC, poverty would have been greater in 2020 if regional countries had not implemented measures such as emergency cash transfers. However, despite the economic recovery experienced in 2021, the estimated relative and absolute levels of poverty and extreme poverty have remained above those recorded in 2019, which reflects the ongoing social crisis. 
• The global COVID-19 pandemic has had severe negative impacts on the global economy, especially low income groups. The economic damage on these low income groups will persist as governments struggle to effectively deal with the coronavirus. 

(Source: ECLAC)

• The Dominican Republic Central Bank increased its monetary policy interest rate by 50 basis points, from 4.50% to 5.00% per year. This resulted in the rate of the permanent liquidity expansion facility (1-day Repos) increasing from 5.00% to 5.50% per year and the interest-bearing deposit rate (Overnight) rising from 4.00% to 4.50% per year. 
• This decision is based on an exhaustive evaluation of the behaviour of the world economy, the greater persistence of inflationary pressures and the perspectives of international financial conditions. 
• The country’s price dynamics continue to be affected by external shocks that are more permanent than expected, associated with higher prices for oil and other important raw materials for local production, as well as the increase in the global cost of transporting containers and other disruptions in supply chains. 
• Average consumer prices rose to 7.8% in 2021 from 3.8% in 2020. Therefore, in an attempt to curtail the impact of inflationary pressures on its economy, DomRep has taken a stance similar to that being employed by other regional and international central banks by increasing their policy rate. In a bid to fight the historic surge in inflation, further increases in the policy rates is expected.

(Source: Dominican Republic Central Bank)