The Bank of Jamaica (BOJ) says it’s to hold the policy interest rate offered on overnight placements at two percent.
This decision reflects the Bank’s assessment that inflation, currently below target, will rise towards the lower end of the target of four-percent to six-percent by the March 2019 quarter and approach the middle of the target range thereafter.
This, as the Bank over the last year recorded lower than targeted inflation under the International Monetary Fund, IMF, Precautionary Standby Agreement.
There were fears sparked by a historic slide in the dollar, that the BOJ and the government were deliberately devaluing the dollar to raise the country’s inflation rate.
Both the government and the BOJ have denied the allegation and released correspondence to back up their claim.
The Bank says its outlook for inflation for the remainder of 2018 and the first part of 2019 is largely based on an expected normalization in agricultural prices, oil prices remaining elevated and higher domestic GDP growth.
In the medium term, the Central Bank says its inflation outlook continues to reflect a gradual acceleration in economic activity.
However, the Bank says the path for inflation continues to reflect some slack in the economy and therefore continued risk of inflation falling below the baseline projection.
The next policy decision announcement date is October 2, 2018.