Bank Of Jamaica Signals Tightening In Monetary Policy

Bank of Jamaica (BOJ) announces its decision to hold the policy interest rate (the rate offered to deposit-taking institutions on overnight placements with BOJ) unchanged at 0.50 per cent per annum. The Bank also decided to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (the Committee/MPC) in September 2021 and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion. While the Bank does not target any specific level of the exchange rate, Bank of Jamaica will also seek to ensure that movements in the exchange rate do not threaten the inflation target.

Monetary policy decisions taken by Bank of Jamaica are aimed at ensuring that the annual increase in the prices of consumer goods and services (i.e. inflation) remains within the Bank’s inflation target of 4.0 per cent to 6.0 per cent.

These decisions were made by a unanimous vote by the MPC. The decisions were based on the MPC’s assessment that, while inflation is likely to breach the upper bound of the Bank’s target range over the next year (starting from as early as the September 2021 quarter), inflation will gradually decelerate thereafter as the transitory effects of the pandemic fade. Conditional on the gradual tightening of monetary accommodation, inflation is projected to remain at 5.0 per cent over the medium term.

A summary of the discussions influencing today’s monetary policy decision has been published on the Bank’s website and will be discussed at Bank of Jamaica’s monetary policy press briefing, scheduled for tomorrow, 20 August 2021.

The next policy decision announcement date is 30 September 2021.