BOJ Maintains Policy Rate on Overnight Balances at 0.75 Percent

The Bank of Jamaica (BOJ) has announced that it is maintaining the policy rate offered on overnight balances from deposit-taking institutions at 0.75 per cent, effective June 28, 2019.

In a statement on Thursday (June 27), the Central Bank said this is based on its latest assessment that monetary conditions are appropriate to support the achievement of the inflation target of four to six per cent, over the medium-term.

The Statistical Institute of Jamaica (STATIN) reported that annual inflation stood at 4.8 per cent in May 2019, up from 3.9 per cent in April.

The May out-turn, according to the BOJ, is consistent with its previous assessment and represents “a return to the centre of the target”, following five consecutive months of annual inflation being below target.

However, the Central Bank cautioned that while annual inflation “has been rising”, underlying inflation “remains low”.

In its May 2019 assessment, the BOJ projected a fall in inflation towards the bottom of the target by the September 2019 quarter and, thereafter, a rise towards the midpoint by the March 2020 quarter.

This is consequent on increased domestic agriculture prices, and improved domestic activity in response to policy rate lowering over the last eight quarters.

“Inflation would then decline towards the bottom of the target in the period after the March 2020 quarter, and only return to the mid-point slowly over the ensuing three years,” the Bank’s statement added.

The BOJ said that the May 2019 policy action “was aimed at mitigating the material risk that inflation would fall below the target during 2020”.