BOJ to raise policy interest rate today

Bank of Jamaica will announce their latest overnight interbank policy interest rate today. The new rate is expected to increase from 0.50 percent that has been in place since August 2019.
On most occasions, the lowering of the overnight rates was mostly cut by cut 25 basis points, indicating the likely upward moves. In light of the sharp rise in CD rates, the move upward for the rate could push the new rate to one percent, initially, with the moderate movement helped by the appreciation in the value of the Jamaican dollar that is going to results in a sharp drop in inflation if sustained.
In August, the Central Bank announced the decision to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (the MPC Committee) in September and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion.
A precursor to the policy rate increase and further tightening of the financial market, the CDs offered by the BOJ on September 29 resulted in a further rise in CD rates and followed other increases in the month.
On Wednesday, this week, the auction of CDs saw 45 bids amounting to $11.6 billion, chasing $10.5 billion offered by the central bank, resulting in average rates of 2.59 percent, up from 2.15 percent at September 22 auction. The latest rate represents a steep increase since the beginning of August when the rate was at just 0.59 percent.
Since the end of July, the bank has withdrawn $10.5 billion from the system and will hold a total of $45.5 million in CDS.