Jamaica’s leading business advocacy organisations have applauded the Bank of Jamaica (BOJ) for its management of the economy including inflation and the foreign exchange rate, but stopped short of giving the central bank full marks as it expressed dissatisfaction with the handling of interest rates.

In a joint release, the Jamaica Manufacturers and Exporters Association (JMEA), the Private Sector Organisation of Jamaica (PSOJ), and the Jamaica Chamber of Commerce (JCC) commended the BOJ for its reduction in the policy interest rate to 6.25 per cent and the maintenance of a stable exchange rate.

“We, however, emphasise the urgent need for commercial banks to expedite the transmission of these rate cuts to borrowers and further monetary easing by the BOJ to stimulate economic growth,” they continued.

Citing data from the Statistical Institute of Jamaica (STATIN), the business lobby groups pointed out that inflation has stabilised, which should create “room for further monetary easing to support economic recovery and growth”.

The All-Jamaica Consumer Price Index (CPI) for November 2024 shows that inflation grew at a rate of 1.0 per cent for that month, influenced mainly by a 2.1 per cent rise in the ‘Food and Non-Alcoholic Beverages’ category, driven by higher prices for agricultural produce following Tropical Storm Rafael.

The point-to-point inflation rate (November 2023–November 2024) was 4.3 per cent, falling within the BOJ’s target range of 4.0 per cent to 6.0 per cent. Calendar year-to-date inflation as of November 2024 was 3.8 per cent.

“These trends affirm a stabilising inflation environment, which provides room for further monetary easing to support economic recovery and growth,” the JCC, JMEA and PSOJ stated.

Notwithstanding the country’s achievement of inflation stability, the associations acknowledge that the Jamaican economy faces significant challenges. While the goods-producing industries grew modestly by 1.5% in Q2 2024, driven by agriculture, forestry, and manufacturing, sectors like construction are underperforming.

As such, the business lobbyists believe there is an “urgent need for accessible and affordable credit to facilitate recovery and expansion.

“The BOJ has successfully preserved exchange rate stability despite external uncertainties, including geopolitical tensions and natural disasters. This stability creates a solid foundation for businesses to plan and invest with confidence. Coupled with a favourable inflation outlook and improving business sentiment, the environment is ripe for robust economic activity,” they stated.

“The JMEA, PSOJ, and JCC strongly urge the BOJ to continue lowering the policy interest rate to further stimulate the economy. While progress has been made, additional reductions are necessary to build business confidence and support critical investments in Jamaica’s productive sectors,” the continued.

The associations also called on commercial banks to adjusting their lending practices to reflect the BOJ’s rate reductions, noting that doing so ensures the benefits of monetary policy are effectively transmitted to businesses and consumers.

“Micro, Small and Medium-sized enterprises (MSMEs), which are pivotal to Jamaica’s economic framework, require affordable financing to boost productivity, drive innovation, and create sustainable jobs,” they pointed out.

To this end, the JCC, JMEA and PSOJ recommend that the BOJ collaborate with the Jamaica Bankers’ Association to address weaknesses in transmitting interest rate changes.

“Swift implementation of lending rate adjustments is vital to optimizing the intended impacts of monetary policy changes,” the groups said.

“Jamaica cannot afford to revert to years of chronic poor economic growth. Our GDP per capita remains low compared to regional counterparts that continue to achieve higher growth rates. After making significant sacrifices to repair our macroeconomy—stabilizing inflation, reducing the debt- to-GDP ratio, and maintaining a stable exchange rate—Jamaica must now accelerate its growth trajectory,” they added.

Moreover, the associations advise the central bank and commercial banks to take advantage of the signs of business confidence with companies actively retooling and expanding to meet market demands. While highlighting challenges such as skilled labour supply shortage and limited access to affordable credit, the business groups believe that, “Collaboration among all stakeholders is crucial to creating an environment that fosters sustained growth and economic resilience.”

“Jamaica has made great strides in stabilising its macroeconomy, creating a strong foundation for accelerated growth. Now is the time for bold action. Commercial banks must immediately align with the BOJ’s policy direction by lowering lending rates and expanding access to credit, especially for MSMEs—the backbone of our economy. Affordable credit is critical to driving productivity, innovation, and job creation.

“The JMEA, PSOJ, and JCC call on all stakeholders to act decisively. Together, we can foster an environment where businesses thrive, fuel economic expansion, and secure Jamaica’s path to sustainable growth and prosperity for all. The time to act is now,” they concluded.