BOJ Focused on Lowering Inflation – Governor

Bank of Jamaica (BoJ) Governor, Brian Wynter, says the institution is focused on lowering domestic inflation, in order to reduce pressure on the exchange rate, which has resulted in depreciation of the Jamaican dollar.

“Where we want to be is to have an inflation rate no higher than that of Jamaica’s trading partners, in the region of three to four per cent. We are not there yet, and so the Bank of Jamaica must remain focused on lowering inflation, so that we can get there,” the Governor said.

He was speaking at the BoJ’s quarterly media briefing, held at the Bank’s downtown Kingston offices, on November 18.

Noting that low inflation is important to the economy for several reasons, Mr. Wynter argued that as long as domestic inflation remains “much above” that of Jamaica’s main trading partners, “the exchange rate will continue to face pressure to depreciate.”

“Without the depreciation, in those conditions, Jamaican firms and farms will struggle to remain competitive against foreign firms selling their goods and their services to the domestic market, and also foreign firms competing with Jamaican firms to sell their goods and services in our export markets,” he indicated.

The Governor acknowledged that exchange rate adjustment “creates challenges for all economic stakeholders,” including “many of the same firms that are facing the struggle to maintain competitiveness.”

“Reconciling these factors represents a conundrum…but one with a sure and sustainable way out. The way out of the conundrum is to lower the rate of inflation and thereby remove this source of pressure on the exchange rate… (and) this is what we are doing,” Mr. Wynter noted.