Finance Minister Fayval Williams
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Finance Minister Fayval Williams
Finance Minister Fayval Williams is relying on the relationship between the Bank of Jamaica and the financial institutions to determine the movement of lending rates offered to the public.
This as the central bank reduced its policy interest rate this week and urged commercial banks to follow suit.
The policy rate operates as the benchmark that influences borrowing costs in the economy.
The BOJ lowered the cost of a short term borrowing by 25 basis points from 6 to 5.75%, which took effect Wednesday.
Commercial banks have been slow to respond to the rate cuts, which has prompted calls for the finance ministry to intervene.
Minister Williams says despite noted inefficiencies with the BOJ's transition mechanism of its monetary policy, the downward movement in interest rates, as well as moral suasion should be enough to influence the commercial banks.
"You'll recall rates were at a low, way low, 0.25%. They moved all the way up to about 7%, and they have been coming down now. This is a very strong signal that the Bank of Jamaica is sending now with the reduction in the overnight rate to banks. And I believe that...as rates continue to move down, we will begin to see the banks respond," she asserted.
Minister Williams was speaking at a post-Cabinet press briefing on Thursday.
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