Bank of Jamaica may be ushering a period of lower interest rates in Jamaica, with decline in rates on the latest certificate of deposit (CDS) when they offered a mere $7 billion in CDs to the public on Wednesday but received bids for $25 billion from 279 applications, resulting in 151 being successful with the CD rate declining from just over 10.38 percent at the previous 30 days offer to an average of a flat 10 percent.
At the end of the auction total CDs that will be outstanding for 30 days amount to $128.5 billion this is down from under $160 billion dollars in late March when the average rate was 11.13 percent.
The amount offered in the auction and the fall in rates could be interpreted as an indication that the Bank of Jamaica has started the process of interest rate reduction in light of continued deflation for the first four months of this year in the order of 2 percent per annum.
The central bank had previously offered $20 billion in CDS for 25 months on May 13 resulting in an average rate of 9.08 percent even as it was undersubscribed with the bids amounting to $19.3 billion.
Bank of Jamaica raised their overnight rate to 7 percent in November 2022 and has maintained that rate since. Inflation for the year to date suggests that the country may be in a longer period of deflation than was thought possible by the authorities who may now be signalling that the policy of high interest rates may have outlived its time from late 2024.
Interest rates drop
May 15, 2024 by
