Taking a cue from the Bank of Jamaica, investors this week demanded substantially higher yields in the latest Treasury Bill auction, effectively sending interest rates higher.
The yield on the six-month bond that has become the proxy for interest rates was 19.26 per cent, a two and a half point gain on last month's 16.96 per cent.
The three-month yielded 16.92, up 171 basis points.
Some applicants demanded, and were allotted bill returns of up to 20.5 per cent on the six-month and 18.49 per cent on the three-month.
Both T-bills in the amount of $400 million each were oversubscribed - the six month moreso by 100 per cent.
Last week, the Bank of Jamaica, worried that the financial system was too flush with cash, put on the market a 20.5 per cent special certificate of deposit to gobble up liquidity.
The two-week instrument matures December 3. The BOJ on that day will also raise the liquidity reserves, from 23 per cent to 25 per cent.
The current T-bill rates are used in the pricing of coupon payments on GOJ variable variable rate instruments.
Pan Caribbean in a note to clients said the increased yield could be reflective of both the central bank's squeeze on liquidity as well as the downgrade of Jamaica's sovereign credit by Fitch Ratings.