THE Bank of Jamaica (BOJ) is holding its policy rate unchanged at 0.50 per cent per annum for another month.

The policy rate is the rate offered to deposit taking institutions on overnight placements with (BOJ), Jamaica’s central bank, which is reviewed monthly.

BOJ Governor Richard Byles, who yesterday announced the bank’s decision to maintain its highly accommodative monetary policy rate, pointed out that Jamaica’s economic outlook is characterised by significant uncertainty relating to the spread of the virus and the consequent depth and duration of the economic impact.

In the near term, he said the central bank is anticipating some upward price pressures due to supply chain disruptions and weather-related increases in agricultural prices.

“However, these will be offset by a sharp decline in oil prices and weaker consumer spending power, given the expected decline in economic activity,” explained Byles as he addressed journalist at the bank’s special virtual press conference yesterday.

He argued that if the domestic and external responses to the pandemic have to be sustained for most of the next fiscal year, the Jamaican economy will contract significantly. In this context, the BOJ governor is anticipating inflation to be at the lower end of the 4.0 per cent to 6.0 per cent range over the fiscal year as well as the ensuing eight quarters.

Byles contended that the near-term outlook reflects significant challenges and heightened uncertainty due to COVID-19, but was quick to point out that the BOJ monetary policy measures along with the Government’s fiscal stimulus are aimed at mitigating the impact of this pandemic on the economy and supporting a speedy recovery once the crisis has passed.

He said the BOJ will continue to closely monitor the impact of COVID-19 on the economy and stands ready to deploy additional measures, including a reduction of the policy rate and the cash reserves requirement to ensure the continued smooth flow of liquidity to all participants in the Jamaican financial system and to maintain orderly conditions within the foreign exchange market.

— DURRANT PATE