Bank of Jamaica Governor Brian Langrin
Bank of Jamaica Governor Brian Langrin says the inflation generated by higher global energy and commodity prices is now spilling over into the rest of the economy.
Speaking at the Institute of Chartered Accountants of Jamaica's business conference on Thursday, Mr. Langrin stressed that businesses expect inflation to continue accelerating during the next 12 months.
Elaborating, he said there is a danger that households and businesses could start seeing higher inflation as the new normal and then use this as a basis to set prices and to determine wages.
He stressed that this would make stability more difficult and costly to restore.
The BOJ governor also made it clear that the September rate hike was not intended to reverse the supply shocks themselves, but was a timely and measured step to prevent inflation from becoming entrenched.
He said it was designed to keep inflationary expectations anchored within the bank's 4% to 6% target range.
Governor Langrin also indicated that the central bank expects inflation to remain high before returning to the bank's target range in the middle of next year.
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