Tight liquidity conditions continue to persist in Jamaica’s money market, as the island’s monetary authority, the Bank of Jamaica (BOJ), mops up excess liquidity to slow down the pace of inflation.

Jamaican dollar money market liquidity remains extremely tight and appears to be intensifying. As such rates are anticipated to remain elevated. Last week, a total of J$13.02 billion was in the market according to BOJ aggregate balances.

Market players were mainly square last week with very limited lending. Against this background, the average yield on BOJ’s competitive price auction on its 30-day Certificate of Deposit (CD) rose to 7.39 per cent relative to 7.27 per cent in the previous week.

US-DOLLAR MONEY MARKET REMAINS STABLE, MODERATELY LIQUID

The highest bid rate for full allocation was 7.60 per cent. Elevated BOJ CD rates have caused demand for higher rates in the market.

The BOJ continues to focus efforts on guiding inflation back within the target range through the tightening of monetary policy.

In the meantime, the US-dollar money market remains stable and moderately liquid despite market activity.

This is due to improved tourism inflows, which continue to support US dollar liquidity. However, market analysts say conditions could tighten somewhat in the coming months.