BANK OF JAMAICA REDUCES MONETARY ACCOMMODATION
Bank of Jamaica (BOJ) announces its decision to increase the policy interest rate (the rate
offered to deposit-taking institutions on overnight placements with BOJ) by 50 basis points to
4.50 per cent per annum, effective 30 March 2022. The Bank also decided to continue
pursuing other measures to contain Jamaican dollar liquidity expansion and maintain stability
in the foreign exchange market. The Monetary Policy Committee (MPC) is prepared to take
further actions at its next meeting depending on the incoming data.
The MPC’s decisions aim to limit the second-round effects of the ongoing and protracted
commodity price shock and guide inflation back to the target range over the next two years.
The measures will cause liquidity conditions to remain tight and interest rates on deposits and
loans to rise, making savings in Jamaican dollars more attractive relative to foreign currency
assets and borrowing in Jamaican dollars more expensive. This will temper the demand for
foreign currency and hence moderate the pace of depreciation in the exchange rate and its
consequent impact on inflation. Bank of Jamaica’s international reserves remain strong,
underpinning the Bank’s capacity to support the foreign exchange market when necessary.
Additionally, the increases in the interest rate will generally reduce demand in the economy
and, consequently, businesses’ ability to pass on price increases to consumers.

Monetary Policy Press Release – March 2022