The Bank of Jamaica, BOJ, late Tuesday announced its decision to again increase the policy interest rate, which is the rate offered to deposit-taking institutions on overnight placements with the central bank, by 50 basis points to 4.50 per cent per annum, effective March 30. It is the fifth rate hike by the monetary policy authority in months as it seeks to rein in galloping inflation.

The benchmark rate hike represents a ninefold rise from the record 0.5 per cent pre-pandemic low that existed for two years from August 2019 to September 2021. The BOJ changed direction at the end of September when it increased the policy rate by a percentage point to 1.5 per cent, in defence of its inflation target of 4.0-6.0 per cent. The rate moved to 2.0 per cent in November, 2.5 per cent in December, and 4.0 per cent in February this year.

The BOJ said it will make its next policy decision announcement on May 19, 2022. Its Monetary Policy Committee, MPC, the BOJ said, is prepared to take further actions at its next meeting depending on the available data.

Inflation has continued to increase, influenced by the COVID-19 pandemic and supply bottlenecks for manufacturers. Annual inflation at February 2022 stood at 10.7 per cent or more than double the lower limit of the Bank’s target range.

“The major upside risk is higher-than-projected increases in international commodity and shipping prices and their impact on domestic prices. This risk largely emanates from the invasion of Ukraine by Russia and the imposition of economic and financial sanctions on Russia by Western industrialised nations, resulting in higher volatility in international energy, commodity and financial markets. Further increases in inflation expectations stemming from the impact of the conflict on international commodity and shipping prices are also an upside risk,” according to the BOJ.

https://jamaica-gleaner.com/article/business/20220330/boj-pushes-policy-rate-45-cent