Sun | Dec 5, 2021

BOJ hikes rate again to 2%

Published:Wednesday | November 17, 2021 | 11:33 AM
Bank of Jamaica Governor Richard Byles.
Bank of Jamaica Governor Richard Byles.

The Bank of Jamaica has effected another interest rate hike, from 1.5 per cent to 2.0 per cent.

The BOJ's policy rate is equivalent to the overnight rate it charges banking institutions for placements with the central bank.

BOJ kept rates at a record low of 0.5 per cent for several years, after a long series of rate cuts, but changed direction at the end of September when it hiked the policy rate by one percentage point to 1.5 per cent, in defence of its inflation target of 4-6 per cent.

Inflation remains unchecked, however. The annual inflation rate as of October was estimated at 8.5 per cent, up from 8.2 per cent in September.

The new BOJ interest rate takes effect today, November 17. The next rate decision is scheduled for December 20.

BOJ also noted in a statement that it intends to take other measures regarding the exchange rate, to ensure that its movements don’t threaten the inflation target, but was explicit that it had no specific forex rate in mind.

The Jamaica dollar traded at $156.38 against the US dollar on Tuesday. Although foreign exchange trading is market driven, the BOJ plays a role through auctions and swaps that are determinants in the currency's value.