In defence of the IMF’s insistence on a higher inflation rate for the island, the Fund’s Resident Representative to Jamaica, Dr. Constant Lonkeng Ngouana, says low inflation over the long term could lead to wage cuts.
STATIN is reporting inflation of 2.8 percent between June last year and June this year. That’s lower than the Bank of Jamaica, BOJ’s target of 4 to 6 percent, as outlined in the agreement with the IMF.
This has triggered a meeting with the IMF, to explain what the BOJ is doing to bring inflation back on track.
However, the Opposition and others have questioned why the inflation target is so high.
While speaking with Kalilah Reynolds and Dennis Brooks on Nationwide This Morning, Dr. Ngouana says while low inflation may seem like a good thing, it’s a signal that economic growth is weak.
He says setting an inflation target also helps businesses to plan. He says with the right structural reforms by the government, the economy will continue to grow and the average incomes in Jamaica will rise.