Bank of Jamaica cuts policy rate to 6.25%

The Bank of Jamaica has cut interest rates on its 30-day certificate of deposit by 25 basis points to 6.25 per cent, on expectations of tempered inflation.

Its policy rate was last adjusted in July when the rate was cut to 6.5 per cent.

The current rate cut took effect on Friday.

The central bank said its outlook on price increases for the fiscal year remains within the target range of six-eight per cent, but subject to events in external economies and the commodities markets.

"The more pessimistic outlook for growth in the global economy and the forecast for slower rates of increase in the prices of international commodities, particularly crude oil, have put a downward bias on domestic inflation for the rest of the fiscal year," said the BOJ.

"These moderating factors are complemented by the continuation of relative stability in the exchange rate and the persistence of weak but improving domestic demand."

ECONOMY TO REMAIN STABLE

The central bank also signalled that it expects the Jamaican economy to re-main stable, given movements towards fiscal consolidation aimed at reining in the deficit.

BOJ expects the economy to grow one to two per cent this year.

The stability, it said, "is being reflected in financial market prices" in what appears to be a signal that the central bank sees commercial lending rates turning in the right direction, downwards.

The current CD rate adjustment brings policy rates below Treasurys, whose September yield reflected a slight two to three basis point uptick to 6.47 per cent on the 28-day bill, 6.37 per cent on the three-month and 6.56 per cent on the six-month bill.

business@gleanerjm.com