Following the May meetings that concluded Monday of the Monetary Policy Committee (MPC) Bank of Jamaica held its overnight policy rate at 7 percent, although sighting lower inflation than projected, the rate has been at this level since November 2022, but the bank maybe signalling rate reduction in late summer.
According to the Central Bank Jamaica, the “headline inflation rate at April 2024 was 5.3 percent, which was within the Bank’s target of 4 to 6 percent and 0.3 percentage point lower than the rate recorded at March 2024. It was also lower than the Bank’s most recent forecast, mainly due to a faster-than-projected deceleration in agricultural food inflation. Core inflation (which excludes food and fuel prices from the Consumer Price Index (CPI)) was 5.7 percent in April 2024, marginally lower than the 5.9 percent in March 2024.”
BOJ cautioned that ‘while some key drivers of headline inflation, such as international grain prices and inflation expectations, continued to decline, international oil prices have increased. Inflation in the economies of Jamaica’s main trading partners has continued to moderate albeit at a slower-than-projected pace. The exchange rate has remained generally stable, given Bank of Jamaica’s (BOJ) monetary policy actions as well as strong tourism and remittance inflows.”
Jamaica’s Central Bank
BOJ went to further state, “the moderation in inflation is expected to be interrupted temporarily as inflation is projected to breach the upper end of the target range towards the end of the June 2024 quarter, mainly reflecting seasonally higher agricultural food inflation, a normalisation in electricity rates following significant declines in the same quarter of 2023, as well as higher transport costs due to an uptick in international oil prices. Inflation thereafter is projected to return to the target range and generally remain there over the next eight quarters except for a few months in 2025. The projected breaches in 2025 largely reflect a normalisation of agricultural prices following sharp declines in March 2024, which are not projected to re-occur.”
