- Governor of the Bank of Jamaica (BOJ), Brian Wynter, says the inflation rate is back on target.
- Speaking at the quarterly monetary policy report press conference, held at the Bank’s downtown Kingston offices on November 19, Mr. Wynter noted that inflation had fallen below the four per cent to six per cent target between March 2018 and August 2018.
Governor of the Bank of Jamaica (BOJ), Brian Wynter, says the inflation rate is back on target.
Speaking at the quarterly monetary policy report press conference, held at the Bank’s downtown Kingston offices on November 19, Mr. Wynter noted that inflation had fallen below the four per cent to six per cent target between March 2018 and August 2018.
“However, the 12-month inflation at October 2018, as reported by the Statistical Institute of Jamaica (STATIN), was 4.7 per cent, higher than the 2.8 per cent recorded at the end of the June quarter,” the BOJ Governor said.
Mr. Wynter explained that the uptick in inflation since June 2018 largely reflects higher, more normal prices for agricultural food crops and increased electricity costs.
He noted that over the next four quarters, inflation is projected to fall to four per cent at December 2018, accelerate to about 4.7 per cent at March 2019, and then rise further towards the upper limit of the target by June 2019.
“Inflation is then projected to fall close to the lower limit of the target in the September and December 2019 quarters and then gradually trend towards five per cent thereafter,” Mr. Wynter said.
He added that the BOJ’s medium-term forecast, which is for inflation to converge at five per cent, is predicated on continued improvements in domestic demand as gross domestic product (GDP) growth strengthens and the labour market improves further.
Mr. Wynter said this outlook is supported by an expectation of further strengthening of the United States (US) economy and continued monetary accommodation by the BOJ, while fiscal consolidation is expected to continue to have a restraining effect on domestic demand.
Meanwhile, Mr. Wynter said the Bank has assessed risk to the inflation forecast to be generally balanced.
“The main downside risks that would cause inflation to be lower than our baseline forecast include a worsening in domestic demand conditions associated with lower than anticipated US GDP growth in the context of escalating trade tensions,” he noted.
Additionally, Mr. Wynter said international commodity prices, in particular crude oil prices, could be lower than expected.
“On the upside, the current accommodative monetary conditions could spur an even faster rise in domestic demand and, therefore, higher inflation than the baseline forecast. Bad weather conditions, second round effects of administered price changes and an increase in inflation expectations are additional upside risks,” he said.