Bank of Jamaica holds interest rate steady as inflation nears target ceiling

Bank of Jamaica (BOJ) has left its benchmark interest rate unchanged at 5.50 per cent on Monday, warning that inflation is on course to temporarily breach the upper limit of its target range as the lingering effects of higher global commodity prices continue to filter through the domestic economy.

"The MPC determined that maintaining the current monetary policy stance is appropriate to limit later (second round) price increases resulting from the recent increases in higher international commodity prices," the central bank said in its monetary policy press release following meetings of the Monetary Policy Committee last Wednesday and Thursday but released its decision today.

The hold was unanimous. 

The MPC noted that headline inflation reached 5.5 per cent in May 2026 — above the bank's most recent projection and the fourth consecutive month of upward movement since the start of the year. 

Core inflation, which strips out agricultural food products and fuel, rose to 4.7 per cent in May from 3.9 per cent in January, reflecting what the Bank described as second-round effects from higher imported commodity prices.

The decision marks the latest chapter in a rate cycle that has swung sharply over the past four years. 

BOJ began raising its policy rate aggressively from a low of 0.50 per cent in late 2021 as post-pandemic inflation surged, eventually peaking above 7.0 per cent. 

As inflation moderated, the BOJ began easing — cutting the rate to 5.50 per cent in February 2026 following Hurricane Melissa's less-severe-than-expected impact on prices.

The MPC noted that while Middle East hostilities are showing signs of moderating, a final resolution has not been achieved, keeping commodity prices elevated and volatile.

It added that crude oil prices fell 9.9 per cent in June month-to-date on optimism over a US-Iran peace agreement, offering some relief.

Economic growth for fiscal year 2026/27 remains projected within a range of 1.0 to 3.0 per cent. 

The next policy decision is scheduled for August 19, 2026.

 business@gleanerjm.com

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