The Bank of Jamaica, BOJ, is calling for a more structured approach to implementing increases for bus and taxi fares going forward.

The Central Bank made the call during its latest monetary policy decision announced on Sunday.

In the same announcement, the BOJ agreed to hold its policy rate despite concerns over inflation.

Chevon Campbell tells us more.

Jamaica’s headline inflation rate in February 2024 of 6.2% remains above the Bank’s target of 4 to 6%

The BOJ attributes the higher-than-targeted inflation impact on the first of two increases in public passenger vehicle, PPV, fares that came into effect in October 2023.

It also takes into account the effect of wage increases throughout the economy.

The Bank of Jamaica says some changes in regulated prices do not reflect current demand conditions and could potentially reduce the effectiveness of its monetary policy in managing inflation.

In this regard, it noted the need for a more structured approach to implementing these price changes.

The criticism comes days after Prime Minister Andrew Holness announced a further increase in the minimum wage to $15,000 for a forty-hour work week.

The Central Bank says inflation is projected to remain above the bank’s target range over the March 2024 to June 2025 quarters, primarily due to the continuing impact of past and impending increases in PPV fares. 

The policy decision came out before announcements by the government that the second round of PPV fare increases had been placed on indefinite hold.

It says without the impact of the two increases in PPV fares, inflation would fall within the target range of 4-to-6% for most of 2024.

But despite the concerns over inflation, the BOJ remains bullish about Jamaica’s economic standing.

International commodity prices and shipping costs continue to decline, the exchange rate has remained generally stable, as have strong tourism and remittance inflows. 

It says the Jamaican economy continues to expand, which supports increases in aggregate demand for goods and services. 

Real gross domestic product for the December 2023 quarter is estimated to have grown within the range of 1-to-3%, and there are signs that the economy continued to expand in the March 2024 quarter.

The BOJ says the buoyancy in the economy is mirrored in the decline in the unemployment rate in October 2023 to a record low of 4.2%

The risks to the Gross Domestic Product, GDP, forecast over the next eight quarters are assessed to be on the upside.

This means that actual GDP growth is likely to trend higher.