IMF projects inflation in Jamaica will be back to acceptable levels by year end
The board of the International Monetary Fund (IMF) says it expects inflation to be back within the Bank of Jamaica's target range of four to six per cent by the end of 2023.
The IMF Executive Board, made the projection in a media release on conclusion of its Article IV consultation with Jamaica.
The board said that over the past few years, Jamaica has been buffeted by a difficult global environment from the COVID-19 pandemic, the war in Ukraine, and the ongoing tightening of global financial conditions.
However, it said the authorities' response to recent shocks has been well designed.
It noted that the Bank of Jamaica has followed a data dependent tightening of monetary policy to counter the inflationary impulse arising from the rapid recovery in demand and increases in global prices.
It said these policies have struck the right balance in responding to shocks, protecting the vulnerable, countering inflationary pressures and further securing debt sustainability.
Nonetheless, the IMF said global risks remain high.
It said the war in Ukraine may push commodity prices higher, a stronger-than-envisaged tightening of global financial conditions may curb capital flows and reduce remittances and new COVID variants could disrupt tourism and trade.
"Directors agreed that maintaining the planned path of primary balances coupled with continued data-dependent monetary policy tightening should further enhance debt sustainability, curb inflation, and create fiscal space to respond to future shocks," the IMF statement said.
The directors emphasised the need to enhance crisis management and consolidated supervision, and strongly encouraged the authorities to step up efforts to improve the anti-money laundering framework in line with the agreed action plan.
Directors also called for further efforts to deepen foreign exchange markets and refine the macroprudential framework.
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