The Bank of Jamaica has announced a further increase in its interest rate by 50 basis points effective today in order to further counteract rising inflation.

In a policy decision announced yesterday the rate has moved from 1.50 per cent to 2 per cent.

Accompanying this rate increase, the Bank decided to maintain other measures to contain Jamaican dollar liquidity expansion.

It says while not targeting any specific level of the exchange rate, the Bank of Jamaica will continue to ensure that movements in the exchange rate do not threaten the inflation target.

The Bank says at subsequent meetings it might maintain or intensify the accompanying measures.

In general, monetary policy decisions taken by the Bank of Jamaica are aimed at ensuring that the annual increase in the prices of consumer goods and services remains within the Bank’s inflation target of 4.0 per cent to 6.0 per cent.

The decision to further reduce the level of monetary policy accommodation was made unanimously by the BOJ’s Monetary Policy Committee.

This was based on the MPC’s assessment that this action was necessary to limit the second-round effects of recent shocks and to guide inflation back within the target range over the next two years.

Inflation is projected to average 5.5 per cent to 6.5 per cent over the next two years.

The Central Bank says Inflation will continue to breach the upper limit of the Bank’s target range over the next 10 to 12 months at higher rates than were envisaged in the previous forecast and is projected to peak in the range 8.0 per cent to 9.0 per cent over this period.

The date of the next policy decision announcement is December 20, 2021.