Effective November 23, the rate offered on overnight placements with the Bank of Jamaica (BOJ), will be reduced to 3.25 percent from 3.50 percent, the BOJ announced today.
The adjustment to rate, used by BOJ as the policy rate, reflects the Bank’s assessment that the inflation outlook for FY2017/18 and FY2018/19 will remain within its medium term inflation target of 4 percent to 6 percent.
Amongst the factors leading to the reduction include, “the recent appreciation of the exchange rate that has attenuated the upside risks to the inflation forecast. This outlook is also reinforced by the Government’s commitment to meeting the medium term fiscal targets outlined in the Fiscal Policy Paper.”
The Bank further stated that, “Jamaica’s key macroeconomic indicators continue to reflect generally positive trends and macroeconomic stability is entrenched.
Treasury bill rates on the decline and heading to 4% soon.
Inflation expectations remain firmly in single digits, international reserves are growing, the current account of the balance of payments is projected to remain at sustainable levels, market interest rates continue to trend downwards and the fiscal accounts remain strong. This easing in monetary policy will support continued credit expansion and economic growth.”
The reduction comes against of a relative sharp fall in Treasury bill rates over the past three issues that saw the November offer resulting in the rate on the 91 days instrument falling to 4.26 percent from 4.58 percent previously and the 181 days rate slipping to 4.89 percent from 5.11 percent. Rates on the 182 days instrument, fell 34 basis points to 5.11 percent having dived 53 basis points to 5.45 percent in September. The 91 days Treasury bill rate, fell 40 basis points from 4.98 percent in September to 4.58 percent in the latest auction.
