Jamaica’s inflation outlook lowered

Bank of Jamaica Governor, Brian Wynter stated that the Bank’s outlook for inflation has changed and he now discloses that the Bank’s forecast to September 2015 was for 12-month inflation to be in the range of 3 to 5 percent, Governor Wynter confirmed that monetary policy decisions focus on the Bank’s forecast for inflation six to nine months ahead.
The governor was speaking at a special media briefing today.The outlook was derived from the changed inflation environment, the Governor stated. Inflation for November and December 2014 was negative, contributing to inflation of minus 0.8 percent for the December quarter and for the calendar year 2014, inflation was 6.4 percent, down from 9.5 percent in 2013.
Wynter said that the exchange rate, depreciation for the fiscal year to 20 January was 5.3 percent which was slower than a year ago when it was 8.1 percent. The Bank expected that the depreciation would slow further because of changes in two fundamentals that drive exchange rate determination: net demand on the current account of the balance of payments and the difference between inflation in Jamaica and inflation in the United States.
The Governor went on to say, “the current account deficit had narrowed dramatically and therefore, net demand from that source was much lower. In addition, the significant decline in the international price of oil had turbocharged the process. Meanwhile, the new inflation outlook significantly narrowed the inflation differential. For these two reasons the Bank expected that exchange rate depreciation will now slow down.”