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By Javaughn Keyes
The Bank of Jamaica has reduced the policy interest rate for the first time since the COVID-19 pandemic.
This comes after complaints by the private sector that they have been reeling from higher costs for borrowing.
Jamaicans could overtime start to see a cut in interest rates on loans and other instruments.
The latest monetary policy decision by the central bank shows that effective today, August 21, the rate offered on overnight balances on the current accounts of deposit-taking institutions will be 6.75 per cent per annum.
This is coming from the 7 per cent per annum at which the rates has been held since November 2022.
The move marks a milestone as the BOJ first adjusted the policy interest rates in September 2021, from 0.5 per cent, in a bid to slow inflation in the economy due to COVID-19.
The BOJ's Monetary Policy committee met last week, and unanimously agreed that based on the current economic conditions, the tight interest rate stance can be eased.
Annual headline inflation at July 2024 was 5.1 per cent, reflecting the fifth consecutive month in which inflation fell within the Bank's target range of 4 to 6 per cent.
The central bank also says the relative stability in the foreign exchange market supported the decision.
The central bank says inflation expectations in Jamaica are on a consistent downward path, with the risks to the inflation outlook being balanced (which means inflation is likely to be in line with projections).
Rising international shipping costs, worse-than-anticipated impact of Hurricane Beryl and other adverse weather conditions could, however, influence higher prices.
Lower-than-projected inflation could come from weaker-than-projected global growth, which could reduce domestic demand and imported inflation.
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