Apr 2017 Financial News

Bank of Jamaica reduces policy interest rate, says banks should follow suit

Apr 05, 2017

Bank of Jamaica (BOJ) announced yesterday that it has further adjusted its policy rate.

With effect from 5 April 2017, the rate offered on its 30-day certificate of deposit will be reduced to 4.75 per cent from five per cent.

The BOJ said in the release announcing the change that the adjustment of the policy rate reflects the bank’s assessment that inflation for FY2017/18 will be within BOJ’s inflation target of four per cent to six per cent for the fiscal year.

“This assessment has been reinforced by the Government’s strong commitment to maintaining a seven per cent primary surplus for FY2017/18 and to meet the overall public sector fiscal targets under the precautionary Stand-By Arrangement, as approved by Parliament. The continued tight fiscal policy posture supports an easing in monetary conditions,” it was stated.

The BOJ noted that Jamaica’s main economic indicators continue to improve “in the context of a strong reform programme and a favourable external environment.

“Economic activity continues to expand, although at a slower pace than its potential rate of growth. Other key macroeconomic indicators have been reflecting generally positive trends: inflation expectations remain firmly anchored in single digits, international reserves remain strong, the current account of the balance of payments is projected to remain at a sustainable level, private sector credit is expanding strongly, and market interest rates have been trending downwards.”

The central bank said it expected that rates applicable to the bank’s overnight lending and deposit facilities that are linked to the policy rate will correspondingly fall by 0.25 percentage points.

Source:
Jamaica Observer
Wednesday April 5, 2017    

http://www.jamaicaobserver.com/business/Bank-of-Jamaica-reduces-policy-interest-rate--says-banks-should-follow-suit_94703