THE Bank of Jamaica (BOJ) has come under more fire for its decision on Friday to announce higher interest rates for a fourth-consecutive time which has taken its key policy rate to the highest it has been in four and a half years.

The central bank on Friday announced it will hike its policy rate by 1.5 percentage points taking the rate to 4 per cent — the highest it has been since June 2017. The new rate takes effect on Monday.

The level of the rate hike is the biggest the central bank has implemented since December 2008, when rates went up by 235 basis points. The aggressive stance comes as the BOJ steps up action to cauterise inflation, which reached a seven-and-a-half-year high of 9.7 per cent in January. The inflation rate remains above the upper limit of the bank’s target to keep overall price increases in a range of four per cent to six per cent.

The BOJ, in raising rates, said: “Without policy actions, this breach is projected to persist over the next 10 to 12 months.”

In additional notes accompanying its decision, the central bank indicated that it “also decided to pursue stronger measures to contain Jamaican dollar liquidity expansion and to maintain stability in the foreign exchange market”, an indication that it will keep a tight lid on how much money is available in the economy. It also said it will “consider maintaining or expanding its suite of policy measures at subsequent policy meetings”, subject to inflation, inflation expectations, and other macroeconomic data evolving as projected.

https://www.jamaicaobserver.com/sunday-finance/rate-hike-boj-hikes-rate-consumers-bracing-for-higher_244326