• Federal Reserve officials expressed confidence that inflation is easing and the labour market is strong, allowing for further interest rate cuts albeit at a gradual pace, according to minutes from the November meeting released on November 26, 2024.

• The meeting summary contained multiple statements indicating that officials are comfortable with the pace of inflation, even though by most measures it remains above the Fed’s 2% goal.

• With that in mind, and with conviction that the jobs picture is still fairly solid, Federal Open Market Committee members indicated that further rate cuts likely will happen, though they did not specify when and to what degree.

• “In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 per cent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time,” the minutes said.

• The FOMC voted unanimously at the meeting to take down its benchmark borrowing rate by a quarter percentage point to a target range of 4.5%-4.75%. Markets expect the Fed could cut again in December, though conviction has waned among concerns that President-elect Donald Trump’s plans for tariffs could stoke inflation higher.

• That said, there was no mention of the election in the minutes, save for a staff notation that stock market volatility rose before the November 5th election results and fell after. There also was no discussion of the implications of fiscal policy, despite anticipation that Trump’s plans, which also include lower taxes and aggressive deregulation, could have substantial economic impacts.

(Source: CNBC) 

• Wigton Energy has announced its success in the Generation Procurement Entity's (GPE) 100MW renewable energy tender. Following a rigorous selection process, Wigton Energy emerged as one of two entities awarded in the tender process.
• Wigton Energy will be installing a 49.83MW solar energy facility in Clarendon. Once completed, it will become the largest solar installation in Jamaica. With this award, Wigton reinforces its leadership in diversifying Jamaica's energy mix and expanding beyond its established portfolio in wind energy.
• CEO of Wigton Energy, Gary Barrow stated: "This project is a testament to the impact of the strategic shift Wigton Energy has undertaken to diversify into multiple forms of renewable energy and not just wind."
• As Jamaica seeks to increase its reliance on renewable energy, Wigton Energy is at the forefront of this critical shift. The new solar facility in Clarendon will supply clean, sustainable power and play a pivotal role in enhancing the country’s energy independence while advancing its environmental goals.
• In recent months, the company made significant structural changes to align with its new strategic direction. Coming out of these structural changes, Wigton Energy will focus on five key strategic pillars to drive sustained and profitable growth, which includes; being brilliant at the basics, growth through diversification, agile work culture, brand repositioning, and strategic partnerships, with an emphasis on diversification.
• As Wigton Energy actively expands into other renewable energy solutions, it is simultaneously working on enhancing operational efficiency and exploring both independent and partnership investment opportunities. This strategic shift is essential for sustaining shareholder value and ensuring long-term growth by branching into new sectors and expanding its capabilities to boost earnings.

(Sources: JSE & NCBCM Research)

• The Government of Jamaica (GOJ) has designed an economic diversification plan to harness Jamaica’s unique comparative advantages and position the nation for sustainable growth in the global economy.
• Prime Minister, Dr. the Most Hon. Andrew Holness, outlined the comprehensive strategy, which aims to diversify Jamaica’s economic base and foster the development of new industries, during the launch of ASPIRE Jamaica, at the Office of the Prime Minister on November 19.
• ASPIRE Jamaica, the GOJ’s new policy framework for inclusive growth, outlines six critical pillars for transforming Jamaica into a modern, peaceful, productive and prosperous society. These are Access to Economic Opportunity for All (Inclusive Growth); Safety and Security; People (Human Capital Development); Infrastructure Development; Reform of the Bureaucracy (Ease, Speed, and Cost of Doing Business); and Economic Diversification/New Industries.
• Expounding on the economic diversification plan, the Prime Minister emphasized, “We must prioritise sectors that will drive future growth. There are numerous opportunities that have been discussed for years, but have yet to be fully realized on a significant scale.”
• Key areas for development include Tourism Linkages, aimed at strengthening the connection between agriculture and tourism. Initiatives like the Agri-Linkages Exchange Platform (ALEX) to reduce imports and increase local production will be key. Another priority is Logistics Hub Development, leveraging Jamaica's strategic location amid global trends toward nearshoring and friendshoring.
• Medical Tourism and Wellness will also be a focus, with the aging North American population presenting an opportunity for Jamaica to offer affordable, high-quality medical services alongside wellness tourism.
• The PM also highlighted the Digital Society Transition, with a vision to make Jamaica the Silicon Valley of the region. This includes initiatives like the National Identification System and expanding internet connectivity across communities. Prime Minister Holness also unveiled plans to accelerate the long-awaited Caymanas Special Economic Zone project, with infrastructure development set to begin by March 2025.

(Source: JIS)

• Barbados and the U.S. Export-Import Bank (USExim Bank) have signed a US$500Mn Memorandum of Understanding (MOU) to improve critical sectors, including renewable energy, cybersecurity, water and sanitation, and maritime domain awareness.
• The agreement, signed on Monday by Prime Minister Mia Mottley and USExim Bank Chairwoman Reta Jo Lewis, will finance U.S.-made goods and services for government projects that align with the island’s push for 100 per cent renewable energy by 2030 and enhanced digital security.
• Speaking during the signing event, Chairwoman Lewis said, “We see Barbados as a key country in the Caribbean where Exim can support impactful projects that improve lives and build economies.
• “From small-scale business support to large transformational infrastructure projects, Exim has the tools to help a wide variety of clients across Barbados.”
• Prime Minister Mottley described the agreement, which remains in effect through 2026, as a win for both nations, noting that the focus areas of the agreement “are all central to maintaining a healthy investment climate for future foreign investment in Barbados.”

(Source: Barbados Today)

• Brazil's government tightened spending controls late on Friday, freezing expenditure at 19.3Bn reais ($3.33Bn) to comply with this year's fiscal rules. The figure exceeds the 13.3Bn reais of spending announced in a previous report in September, according to a bi-monthly revenue and expenditure report from the Planning and Finance Ministries.
• The government also revised its 2024 primary deficit forecast to 28.7Bn reais, slightly up from the previously projected 28.3Bn reais, yet remaining within the fiscal target of a zero deficit for the year, which allows for a tolerance margin of 0.25 percentage points of GDP in either direction, permitting a shortfall of up to 28.8Bn reais.
• The 6Bn reais increase in the spending freeze came as the government projected higher mandatory expenditure for this year, primarily driven by higher social security benefits, which would have breached a legally established spending cap.
• The rapid growth of mandatory spending has fueled market concerns about the sustainability of Brazil's fiscal framework, affecting long-term interest rates. It also affected the Brazilian real, which has weakened more than 16% against the dollar year-to-date.
• Finance Minister Fernando Haddad said a long-awaited package to curb mandatory spending is expected to be announced next week. The government had indicated that the measures would be unveiled after municipal elections held at the end of October, but a delay in presenting the package has dampened market sentiment.

(Source: Reuters)

• Britain is imposing the biggest sanctions package against Russia's shadow fleet, targeting 30 vessels, according to foreign minister David Lammy on Monday. Lammy urged G7 allies to stand with and equip Ukraine for as long as it needs.
• Britain and other Western nations are keen to ensure Ukraine is in the strongest possible position to defend itself this winter. Lammy said before a meeting of G7 foreign ministers in Italy he was sure Kyiv (the capital and most populous city of Ukraine) would get "the funds and the military equipment and kit to get through 2025".
• "We are determined to ensure that both the ships, the enablers of those ships thwarting European and UK sanctions are hurt at this time," he said. Britain assessed that Russian President Vladimir Putin showed "no signs at all of wanting a negotiation" to end its war with Ukraine, he added.
• Publishing details of the sanctions, Britain said the ships being targeted had transported billions of pounds worth of oil and oil products in the last year, and the new measures would bring the number of oil tankers under UK sanctions to 73.

(Source: Reuters)

• The economic landscape in Canada has taken some thrilling turns recently. After a steady average inflation rate of 1.9% over the two decades leading up to the COVID-19 pandemic, perfectly aligned with the Bank of Canada’s (BoC) goal of 2.0%, inflation data dramatically intensified in 2022.
• Prices soared in 2022, peaking at 8.1% in June, driven by post-COVID price shocks, with the deceleration in subsequent quarters further supported by easing supply chain issues and a pullback in commodity prices. Fast forward to October 2024, Canada’s annual inflation rate has landed at a smooth 2.0%, though marking a notable 0.4% increase after two months of declines.
• Looking ahead, Canada's below-trend growth is set to keep inflation within the target, paving the way for the BoC to continue its bold rate-cutting journey that began in June 2024. So far, the BoC has made waves by slashing its policy rate by 175 basis points down to 3.75%.
• What’s more, the BoC’s commitment to maintaining a "low, stable, and predictable" environment for inflation is crucial in boosting investment confidence and improving living standards. While this suggests a dual mandate of inflation-control targeting and a focus on job creation and productivity, the BoC is widely perceived as independent and credible.
• That said, Canada's significant household debt issues are likely to encourage the BoC to act aggressively, increasing expectations for the BoC's policy rate to decline to 3.50% by end-2024 and to 2.50% by end-2025.
• Yet, getting cuts below these levels might prove to be a challenge in a still-complex inflationary environment, as the consumer price index (CPI) headline inflation is projected to average around 2.5% in the upcoming decade.

(Sources: Fitch Solutions & NCBCM Research)

• According to PIOJ data released on November 20, 2024, the Jamaican economy is estimated to have contracted by 2.8% for the quarter ended September 2024 (Q3 2024), reflecting declines in both the Services and the Goods-Producing industries.
• During the quarter, the contraction in the economy was broad-based. All the Goods Producing industries declined, while among Services industries only Finance and Insurance services grew marginally. Agriculture, Forestry & Fishing went down 13.5%, leading to the decline in the Good Producing Industry, reflecting the adverse impact of Hurricane Beryl and other hydrological events on agricultural infrastructure, crops and livestock.
• Similarly, the Mining & Quarrying industry contracted by 15.2%, reflecting declines in the Bauxite & Alumina and Quarrying Sub-industries. Total bauxite production is down 17.1% with lower alumina and crude bauxite production being notable culprits. The Quarrying sub-industry also fell, particularly in sandstone and Limestone production.
• However, the remaining goods-producing sectors also declined. Manufacturing declined by 2.0% due to declines in Food, Beverages & Tobacco, while Construction was also estimated to have contracted by 2.8%.
• Declines in the Services Industry were led by the Electricity & Water Supply and Transport, Storage & Communication sectors, which saw the most significant contractions.
• The Electricity & Water industry declined by 5.8%, reflecting decreases in electricity and water consumption. Notably, there was a 10.6% decrease in usage for the largest power users amid significant damage and losses from Beryl and delays in electricity restoration in sections of the island. Additionally, there was a 1.0% reduction in water usage, primarily in the western division. Meanwhile, the Transport, Storage & Communication sector contracted by 2.8%, owing to a 7.8% decline in passenger movement and a 9.7% decrease in cargo handling, with significant drops at the Port of Kingston (down 10.8%) and Outports (down 22.6%).
• Amid the Q3 contraction, Jamaica’s economic outlook for Q4 2024 is negative due to the lingering effects of Hurricane Beryl, Tropical Storm Rafael, heavy rainfall and the U.S. State Department’s Level 3 Travel Advisory. Considering these after-effects, the PIOJ expects economic growth measured by Real GDP to fall within the range of -1.5% to 0.0%. If Jamaica’s economy contracted for a second consecutive time in Q4 2024, it would meet the technical definition of a recession.

  (Source: PIOJ & NCBCM Research)

• According to PIOJ data released on November 20, 2024, the Jamaican economy is estimated to have contracted by 2.8% for the quarter ended September 2024 (Q3 2024), reflecting declines in both the Services and the Goods-Producing industries.
• During the quarter, the contraction in the economy was broad-based. All the Goods Producing industries declined, while among Services industries only Finance and Insurance services grew marginally. Agriculture, Forestry & Fishing went down 13.5%, leading to the decline in the Good Producing Industry, reflecting the adverse impact of Hurricane Beryl and other hydrological events on agricultural infrastructure, crops and livestock.
• Similarly, the Mining & Quarrying industry contracted by 15.2%, reflecting declines in the Bauxite & Alumina and Quarrying Sub-industries. Total bauxite production is down 17.1% with lower alumina and crude bauxite production being notable culprits. The Quarrying sub-industry also fell, particularly in sandstone and Limestone production.
• However, the remaining goods-producing sectors also declined. Manufacturing declined by 2.0% due to declines in Food, Beverages & Tobacco, while Construction was also estimated to have contracted by 2.8%.
• Declines in the Services Industry were led by the Electricity & Water Supply and Transport, Storage & Communication sectors, which saw the most significant contractions.
• The Electricity & Water industry declined by 5.8%, reflecting decreases in electricity and water consumption. Notably, there was a 10.6% decrease in usage for the largest power users amid significant damage and losses from Beryl and delays in electricity restoration in sections of the island. Additionally, there was a 1.0% reduction in water usage, primarily in the western division. Meanwhile, the Transport, Storage & Communication sector contracted by 2.8%, owing to a 7.8% decline in passenger movement and a 9.7% decrease in cargo handling, with significant drops at the Port of Kingston (down 10.8%) and Outports (down 22.6%).
• Amid the Q3 contraction, Jamaica’s economic outlook for Q4 2024 is negative due to the lingering effects of Hurricane Beryl, Tropical Storm Rafael, heavy rainfall and the U.S. State Department’s Level 3 Travel Advisory. Considering these after-effects, the PIOJ expects economic growth measured by Real GDP to fall within the range of -1.5% to 0.0%. If Jamaica’s economy contracted for a second consecutive time in Q4 2024, it would meet the technical definition of a recession.

  (Source: PIOJ & NCBCM Research)

• The Bank of Jamaica's Monetary Policy Committee (MPC) reduced the policy rate by a further 25 basis points (bps) to 6.25% per annum, effective 22 November 2024. In the meeting, the MPC also agreed to preserve relative stability in the foreign exchange market.
• This latest rate reduction brings the cumulative cuts to 75bps since the BOJ pivoted its monetary policy stance earlier this year on an improved inflation outlook. The continued easing of monetary policy is also a much-needed stimulus for the economy amid the slowdown in activity in Q2 and the subsequent 2.8% contraction in the third quarter.
• Inflation for October 2024 was 4.9%, down from 5.7% in September, and within the Bank’s target range of 4.0–6.0%. Core inflation, which excludes the most volatile inflation components, has remained below 6.0% for 16 consecutive months, indicating stable price pressures.
• Inflation is expected to remain within the target range over the next two years due to declining international grain prices and moderating inflation in trading partner economies. Private sector inflation expectations are also improving, supported by stable foreign exchange market conditions.
• Notwithstanding the encouraging inflation outlook, notable risks include economic policy changes among trading partners, geopolitical tensions, adverse weather and labour market pressures. The MPC emphasised that future interest rate adjustments will be based on incoming data and reaffirmed its commitment to foreign exchange stability.
• Given the sharp contraction in economic activity and inflation pressures subsiding, a more aggressive pace of rate reduction would be welcomed by local interests. However, the BOJ appears to be balancing the risks to inflation from a weaker exchange rate if the interest rate differential between the JMD-USD widened.

(Source: BOJ)