By CentralBankNews.info
Jamaica’s central bank cut its policy rate by a further 50 basis points to 2.0 percent, according to its website, but a statement scheduled for June 27 had yet to be issued late in the day.
The Bank of Jamaica (BOJ) has now cut its rate by 125 basis points this year and by 175 points since July last year when it adopted the overnight deposit rate as its new signal rate.
Jamaica’s inflation decelerated further to 3.1 percent in May from 3.2 percent in April for the third month in a row of inflation that is below the central bank’s target of 4- 6 percent.
In its previous policy decision from May, when it lowered the rate by 25 basis points, the BOJ forecast that inflation over the next three quarters would be slightly below the lower bound of the inflation target before rising towards the centre of the target in the following quarter.
The projected trajectory of inflation reflects the impact of a rapid fall in in agricultural food and electricity prices though inflation will also be affected by higher crude oil prices.
BOJ also said in May that its risk to its inflation forecast were skewed to the downside, with the major risk from weak domestic demand and slower than anticipated global economic growth from “geo-political tensions and protectionist policies.”
Upside risks to inflation stem from higher commodity prices, particularly oil, and the risk that adverse weather may trigger higher-than-expected rises in agricultural prices.
Earlier this month the International Monetary Fund (IMF) noted the decline in Jamaica’s inflation rate to below the BOJ’s target range.
The IMF also lent its support to the central bank’s recent rate cuts and its “resolve to cut interest rates further, if needed to steer inflation towards the mid-point of the central bank’s target range.”
The IMF team also welcomed the progress being made by authorities in revising the central bank act, which it said would be critical to a full shift to inflation target and the related work to strengthen central bank communications.