BOJ maintaining policy rate, while targeting slightly higher inflation

The Bank of Jamaica (BOJ) says it will keep its policy rate of 0.5 per cent, while targeting a slightly higher inflation. 

“Looking further ahead, the BOJ expects that the annual rate of consumer price increase will average about 4.7 per cent over the next eight quarters,” Governor Richard Byles said at his quarterly briefing at the Central Bank in downtown Kingston this morning.

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Governor of the bank of Jamaica, Richard Byles

The outlook for inflation is based on the stimulating effects of the BOJ’s past monetary accommodation on prices, as well as imported inflation.

He also informed journalists that the BOJ will closely monitor the impact on credit expansion, capital market transactions, and overall economic activity. 

Meanwhile the BOJ said, despite the volatility of the foreign exchange market, the introduction of the FX swap along with the B-FXITT operations, already in place, will seek to “smooth out” excess volatility and “restore orderly conditions in the market”, according to Byles.

The BOJ introduced the Foreign Exchange Swap Arrangement on January 21 as a method to provide FX liquidity to banks and cambios at a set price.

In addition, the BOJ said it intends to introduce its FX platform for banks and cambios later this quarter which would improve transparency in the system.