Will the Bank of Jamaica pivot avoid a policy mistake? IMF lauds resilience just as Hurricane Beryl approaches
In an interesting piece of timing, on Friday, the Bank of Jamaica (BOJ), in its own words, “pivots to easing monetary policy” just as the IMF lauded Jamaica’s “resilience” reforms literally the day before Beryl was upgraded to a hurricane.
The BOJ cited as its reason that the May 2024 annual inflation number of 5.2% was the third consecutive month it had remained in the 4 to 6% percent target band, the fourth month of decline in the headline rate, and that it was significantly lower than the bank’s recent forecast. It is worth mentioning that this better-than-expected performance may be partly due to the cancellation by Minister of Finance Dr. Nigel Clarke of the planned second phase of the increase in public transportation fares, e.g., taxis, previously scheduled for April. The BOJ also noted that both core inflation rates, which exclude food and energy—food generally and agricultural food products—at 5.6% and 5.1%, respectively—were also within the band. Contained domestic demand, a stable exchange rate, a decline in imported inflation, a stabilization of inflation expectations and a moderation in wage pressure were also cited. Finally, the BOJ said it now expected inflation to remain within the target range over the next two years, except for a few months in 2025 due to agricultural prices, effectively a seasonal phenomenon, and that the risks are balanced, put another way meaning they believe their own forecast.
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