The Bank of Jamaica will continue to hold its policy rate unchanged as it believes the current value is aiding in the expansion of economic growth.
BOJ Governor, Richard Byles, says holding the rate steady is in keeping with the current inflation target.
The BOJ’s policy rate, which is the rate offered on overnight balances, will remain at 0.5 per cent.
The low rate is meant to stimulate commercial bank lending, which in turn is expected to boost private sector expansion.
Governor Byles says the central bank has seen marked improvements in loan activity.
Mr. Byles says credit extended by deposit-taking institutions grew by over 20-per cent last year while household credit grew by 16-per cent.
The Central Bank Governor says this improvement was not properly reflected in GDP growth due to the negative impact from the shutdown of the Alpart bauxite plant in Nain, St. Elizabeth.
But, he says when the closure is taken out of the equation the country is showing signs of improved growth.
Meanwhile, Governor Byles, says demand and supply of foreign exchange remain in balance despite recent bouts of extraordinary demand.
He says the recent depreciation of the Jamaican dollar versus the benchmark US dollar was as a result of a high demand period.
Mr. Byles says this demand is settling and the currency has again started to appreciate.
However, the Bank of Jamaica has introduced a new instrument to stabilize the forex market.
Richard Byles, Governor of the Bank of Jamaica.
He was speaking at the Central Bank’s quarterly media briefing at Nethersole Place yesterday