There are fresh concerns that banks are not passing on reductions in interest rates to their customers.
The Bank of Jamaica, BOJ, announced yesterday that it’s lowering its policy rates again – the fifth time in the past year. It’s expected that the banks should follow suit, and lower their lending rates as well. But they haven’t been doing this in keeping with the BOJ’s rate reductions.
This time last year, the BOJ’s overnight policy rate was 5-percent. Today, it’s only 2.75 percent, after the latest reduction on Tuesday. But the banks’ lending rates haven’t moved accordingly.
A representative of The Guardian Group who attended the BOJ’s quarterly media briefing today put the issue to the Central Bank Governor, Brian Wynter.
According to BOJ Deputy Governor, Dr. Wayne Robinson, it typically takes about three months after the BOJ lowers its rates before banks start passing this through and reducing their rates as well.
But Governor Wynter notes the banks are taking too long. He says more competition is needed.
The Governor also notes there’s not enough consumer advocacy to let consumers know they can renegotiate their mortgage rates, for example, now that these rates have been falling.