BOJ Lowers Policy Interest Rate to 6.5%

The Bank of Jamaica (BOJ) has reduced its key policy interest rate by 25 basis points to 6.5 per cent, marking the second such adjustment since it began its expansionary monetary policy in August.

The new rate, effective Tuesday, October 1, applies to financial institutions doing business with the Central Bank.

This follows a meeting of the Monetary Policy Committee (MPC) held last Thursday and Friday.

The rate cut comes despite inflation rising to 6.5 per cent in August, up from 5.1 per cent in July.

However, the BOJ maintains an optimistic outlook, expecting inflation to return to its target range of 4.0 to 6.0 per cent within the next few quarters.

The bank attributes this projection to a potentially smaller impact of Hurricane Beryl on agricultural supplies and the continued moderation of key inflation drivers, such as falling international commodity prices.

This latest reduction follows an earlier 25-basis-point cut in August, which lowered the policy rate from 7.0 per cent to 6.75 per cent.

The BOJ had previously raised rates from 0.5 per cent to 7.0 per cent starting in October 2021 to combat inflation. Recent data indicate that inflationary pressures have begun to ease both locally and globally.

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