Minister of Industry and Commerce Senator Aubyn Hill is a banker with vast international experience.

Banking is his profession and under his leadership, he re-energised NCB and placed it on the path to preeminence.

The Bank of Jamaica (BOJ) lowered its policy rate four times last year, sending the signal that the commercial banks can follow suit.

Access to loans is the lifeblood of small businesses which in turn help drive the economy. An indication of growth is the success of small and medium enterprises.

BOJ governor Richard Byles has made it clear on a number of occasions that he cannot mandate the banks to lower their rates but rather he can send the signal and encourage them to do so. Inflation has remained in the four to six per cent range and the Central Bank has played its part in helping to facilitate the Jamaican economy despite the ravishes of Hurricane Beryl.

The banks have obstinately refused to lower rates, patently ignoring the Bank of Jamaica’s signal.

Radcliffe Daley, vice-president of the Jamaica Bankers Association (JBA), has said that the banks are reluctant to do so until the asset tax is removed and are looking for further policy rate reductions from the Bank of Jamaica.

The banks are going to make it a tough few months for Jamaicans and things will get a lot more uncertain given the stance taken by the Trump administration and its impact on geo-politics. Already the Federal Reserve has taken a wait-and-see approach and has decided not to lower its interest rate.

Jamaican businesses will find it more arduous to source capital. Consumers will get no reprieve. 

Minister Hill is calling on Jamaica’s commercial banks to lower their lending interest rates and play their part in stimulating economic growth in the country. For the third quarter of 2024, growth was down 3.5 per cent. 

A statement from the Office of the Prime Minister (OPM) said that credit should be more accessible to companies and Jamaican consumers.

Minister Hill made the point succinctly declaring at a post-Cabinet briefing: “ Economic growth—which is what we have to do after we put our fiscal house in order—economic growth cannot happen with very high interest rates. It’s in the banks’ interest, it’s in ordinary Jamaicans’ interest who would pay less interest, it’s in businesses’ interest that the bank lending rate comes down as quickly as they can.

“Of course, banks have to run their business. We want to make sure that they’re profitable but the Central Bank has indicated that the non-performing loans of the banks is about 2.4 per cent. That’s a very, very acceptable number.  So we know we’re not pressuring the banks to go make bad loans…but we need to make sure that we get those rates down.”

The Bank of Jamaica’s policy rate is now down to six per cent per annum.

Minister Hill is right and he should be joined by the country’s business leaders who have remained tight-lipped on the banks’ unwillingness to lower interest rates. He can’t be the lone voice in the wilderness. 

Drawn on the asset tax issue, Hill adroitly sidestepped it saying it was not in his remit to talk on tax issues and that the finance minister was best placed to do so. 

The Government has managed to attain macroeconomic stability after years of turbulence. The aim now is to maintain consistent growth to facilitate businesses and attract investment. All Jamaicans will benefit from this.

The Bank of Jamaica has dropped the policy rate by 100 basis points in five months.

Speaking to former Royal Bank of Canada executive Michael McDonald, he said: “Aubyn Hill is spot on here and all Jamaicans should pay attention to what he has to say. It’s going to be a rough year and the banks in Jamaica will dig their heels in. They are not concerned about the country’s growth and economic prospects as they have to please their parent group. Other than NCB, the big banks have to answer to a parent abroad who insists on maximising profits before all else. They set the mark and the Jamaicans have to meet it. That’s why there are no creative bankers in Jamaica largely because they are not encouraged to be so. They do not have the latitude to exhibit thinking outside of the box. It’s all about complying with prescribed mandates.”