BoJ says keeping inflation under control critical to Jamaica's economic growth

The Bank of Jamaica says keeping inflation under control is critical to Jamaica's economic growth, as the central bank defends its decision to take a more aggressive monetary policy stance.

The bank says allowing inflation to remain elevated for too long could ultimately make Jamaica's economic recovery more difficult.

Bank of Jamaica Governor Brian Langrin, speaking at a post monetary policy briefing on Tuesday, said the latest policy move was carefully calibrated as the central bank tries to keep higher inflation expectations from becoming entrenched in the economy.

"Anchoring inflation is essential to growth," he stressed, adding that "higher and spiraling inflation would actually reduce growth. It reduces households' purchasing power. They become more uncertain, and they have a tighter budget to purchase goods and services in the economy. It increases business costs through wage increases, increases in the prices of goods and services, and it ultimately would make the recovery weaker and more difficult."

Mr Langrin said getting inflation back within the target range by mid 2027 will also depend on factors outside the bank's control, including global oil prices and weather conditions.

"We certainly aren't saying we're expecting an increase or further escalation in tensions. But if we do and oil prices even shift higher than our severe scenario, if weather conditions are more dire than expected, then it could impact how we act going forward. But at this point, if conditions remain as they are and we see no further pickup in expectations, we'd certainly be happy not to act."