Bank of Jamaica is forecasting a contraction in the economy in the range of 10 to 12 percent in 2020/21 fiscal year before partially recovering with growth in the range of 4 to 8 percent in the 2022 fiscal year to March.
BOJ interest holds overnight rate.
“A projected decline in real GDP for the March 2021 quarter is expected to be mainly reflected in Hotels & Restaurants, Transport, Storage & Communication and Other Services,” the central bank states. “The overall decline for the quarter, which is expected to be smaller than the contractions of the previous three quarters, is largely based on the adverse, albeit receding, impact of the global COVID-19 pandemic on travel and entertainment activities,” the bank’s release stated. The Bank’s current assessment suggests that the risks to the GDP forecast are balanced.
Monetary Policy
“While the impact of the Covid-19 virus has recently led to an increase in the stringency of measures in Jamaica to control its spread, there remains optimism about future GDP growth as vaccination programmes have commenced both locally and globally. Bank of Jamaica has maintained an accommodative monetary policy stance aimed at supporting a speedy economic recovery once this crisis passes. Bank of Jamaica remains committed to ensuring that inflation remains low and stable, within its target and, at the same time, is prepared to take all necessary actions to ensure that Jamaica’s financial system remains sound”, the release went on to state.
“The Bank intends to maintain this monetary policy stance until there are clear signs that economic activity in Jamaica is returning to pre-COVID-19 levels.” Against this background, the central bank has held the policy rate at the historic low level of 0.50 percent based on its assessment that inflation will generally continue to remain within the target of 4 to 6 percent over the next two years. The bank’s accommodative monetary policy posture is also aimed at supporting a recovery in economic activity in Jamaica, a release from the bank states.
