Jun 2010 Financial News

BOJ cuts interest rates again

Jun 04, 2010

THE interest rate payable on Bank of Jamaica (BOJ) 30-day Certificates of Deposit will be reduced by 50 basis points, effective today, from 10.00 per cent to 9.50 per cent.

According to the BOJ, "inflationary impulses, particularly those related to recent tax measures, have abated while the prices of key imported commodities, especially oil", have also been moderated.

"These developments are moving the likely outturn for inflation in fiscal year 2010/11 towards the lower end of the forecast range of 7.5 per cent to 9.5 per cent," the central bank said in a statement last night.

The bank added that "secondary trading of securities as well as successive auctions of Treasury Bills all indicate an endorsement by the market of the new interest rate norms".

"Treasury Bill yields have fallen below 10.00 per cent. Entrenchment of the lower interest rate structure has been supported by the appreciation of the exchange rate and the reduction of sovereign credit risk, as reflected in falling yields on internationally traded GOJ bonds," the bank said.

Meanwhile, the bank said its outlook for growth in the fiscal year 2010/11 remained "largely unchanged", despite last week's interruption of economic activities in the Kingston Metropolitan Area.

Persistent gunfire between members of the security forces and gunmen caused an almost total lockdown of the city for three days last week.

"Some fallout in tourism-related earnings is anticipated in the short run but the prospective reopening of a major alumina processing plant in June and the maintenance of business activity throughout most of Jamaica will contribute to a modest recovery in GDP growth in this fiscal year," the BOJ said.

"The bank also believes that the ongoing reforms embedded in the Government's economic programme will lead to a lasting improvement in public finances and debt management and will create a basis for longer-term financial stability," it added.


Source:
Jamaica Observer
Friday June 04, 2010

http://www.jamaicaobserver.com/news/BOJ-cuts-interest-rates-again_7675055