Jamaica Employers’ Federation (JEF) President, David Wan is expecting the Bank of Jamaica (BOJ) to lower the policy interest rate on deposit-taking institutions’ overnight placements starting next month.
This expectation comes following the latest inflation rate out-turn of 6.2% for March 2023, which is within touching distance of the BOJ’s target range of 4% to 6%. This expectation is also influenced by global consensus for commodity and shipping prices to fall and takes into account the Bank’s overall monetary policy stance.
Wan predicts that the BOJ will cut its policy rate by half a percentage point at its next Monetary Policy Committee (MPC) meeting, slated for later this month. He is praising the monetary authorities for engineering foreign exchange stabilization and appreciation, which has served to temper inflation.
Additionally, the JEF President observed that a “loosening up” of the global supply chain, which was largely crippled by the pandemic, is driving down inflation.
BOJ policy action driving down inflation
For his part, BOJ Deputy Governor, Dr Wayne Robinson is indicating that due to the Central Bank’s policy actions, inflation has been reduced over the past 10 months. Inflation is projected to return to the target range during the final three months of 2023, between October and December.
However, Dr Robinson pointed to certain risks to this projection, such as global oil prices, labour market conditions, and natural disasters. However, the BOJ remains cautiously confident that inflation will continue to trend in the right direction and that it should converge to the target by the end of the year.