Economic Growth To Strengthen In 2027/28

Bank of Jamaica (BOJ) Governor, Dr. Brian Langrin, says economic growth is expected to strengthen in the next fiscal year, with indicators pointing to improving demand as Jamaica gradually recovers from Hurricane Melissa.

While the fiscal year 2026/27 lays a resilient foundation amid temporary agricultural, tourism, and mining adjustments, the economic outlook is expected to accelerate into the following year.

“Growth is expected to strengthen in 2027/28 as these constraints ease and reconstruction gathers pace,” Dr. Langrin said.

He was addressing a virtual press briefing on Tuesday (September 29), where he announced that the BOJ Monetary Policy Committee (MPC) has increased the policy rate by 50 basis points from 5.5 per cent to six per cent per year, effective September 29, 2026.

The move is part of measures to contain inflation, or the general level of price increases in the economy. The policy rate is offered to deposit-taking institutions, like commercial banks, on their current accounts held at BOJ.

Explaining the decision, Dr. Langrin said it was informed by the need to safeguard price stability given that temporary supply shocks have persisted and have begun to generate second-round effects, requiring a stronger monetary policy response.

Maintaining price stability is BOJ’s primary mandate under the Bank of Jamaica Act.

Mr. Langrin explained that since the Committee held the policy rate at 5.50 per cent in August, persistently high energy and transport costs, consistently higher agricultural food costs and increased import demand associated with post-hurricane rebuilding have extended inflation beyond a temporary supply shock.

Headline inflation increased to 7.9 per cent in August, up from 7.5 per cent in July and 1.2 per cent a year earlier. The increase in inflation in August mainly reflected drought-related damage to crop yields, particularly for vegetables, and the pass-through of higher international commodity prices to petrol costs, he said.

“Continuing to look through these shocks could allow temporary pressures to become entrenched and undermine the credibility of our commitment to price stability,” Dr. Langrin said.

He pointed out that the MPC judged that urgent action was needed to limit second-round effects, reduce inflation expectations and avoid a protracted delay in returning inflation to the target range of between four per cent and six per cent.

The Governor said the Bank remains committed to its primary mandate of price stability. He noted that the Bank recognises that higher food, transport, and energy costs directly affect Jamaican households, while businesses face higher input and operating costs.

“The MPC acted decisively to protect purchasing power and prevent inflation from taking hold. Price stability is the foundation of Jamaica’s economic resilience,” Dr. Langrin explained.

He said higher inflation continues to be driven by both global factors and local weather conditions that are forecast to continue to influence higher levels of inflation to mid-2027, after which inflation is expected to return to the Bank’s target range if geopolitical conflicts and weather conditions do not worsen.

Turning to the foreign exchange market, he said it has remained relatively stable pointing out that as of September 24, the exchange rate had appreciated by 1.1 per cent year over year, compared with a 1.9 per cent depreciation a year earlier.

The BOJ Governor said gross international reserves remain healthy at US$6.6 billion as at the end of August, equivalent to 143.9 per cent of the adequacy measure, providing a strong buffer against heightened geopolitical uncertainty and supporting adequate foreign exchange availability and relative exchange rate stability.

Notwithstanding these developments, he pointed out that the current risks to the economic outlook require continued vigilance, sound policy judgement, and decisive action.

“In the coming months, the MPC will assess incoming data, inflation expectations, and global and domestic developments. If upside risks materialise or expectations move further from the target, the Committee stands ready to act. We will do what is necessary to return inflation to the target range and safeguard Jamaica’s economic stability,” Dr. Langrin said.