Durrant Pate/Contributor

The domestic banking system remains sound with adequate capital and liquidity is the latest assessment of the Bank of Jamaica (BOJ).

The assessment was made by the BOJ’s Monetary Policy Committee (MPC) at its meetings on September 26 and 27, 2024, which concludes that the net flow of new domestic currency loans to the private sector for July 2024 continues to moderate. 

The MPC has assessed that the domestic fiscal policy stance continues to pose no risk to inflation over the near term. Also, the lagged effect of the BOJ’s monetary policy posture over the past three years should continue to dampen domestic demand and wage pressures.

Inflation expectations in Jamaica have been on a consistent downward path and the exchange rate has been fairly stable. 

Inflation projection

In this regard, the MPC says, “Inflation is expected to settle within the Bank’s target range over the forecast horizon, with the exception of the next two to three months. There is, however, an upside risk to the inflation projection in the context of the current active hurricane season.”

The outturns for selected external indicators have generally been below the BOJ’s projections in which average grains prices (wheat, corn and soybean) declined month over month by 3.7% and 9.9% in July and August 2024, respectively, compared with the BOJ’s projection for stable prices for both months. 

Similarly, the average liquefied natural gas (LNG) prices for July and August 2024 declined by 13.6% relative to a projected decline of 3.6%. The fall in LNG prices reflected a decline in demand, which was manifested in an increase in natural gas inventories.

In addition, the average of daily West Texas Intermediate crude oil prices for July and August 2024 declined by 2.1%, lower than the BOJ’s forecast. On the other hand, international fertiliser prices, on average, increased marginally over July and August 2024 amid a reduction in supply from China.