KINGSTON, Jamaica— The Jamaica Chamber of Commerce (JCC) has become the latest entity to voice its displeasure with the Bank of Jamaica’s decision to increase its policy rate from 0.5 per cent to 1.5 per cent.

In a statement released on Friday, the JCC said that while it understands the concern about rising inflation expectations and supports the BOJ’s stance overall policy of inflation targeting, it is not in favour of a further rise in interest rates this year.

”We note that the Bank of Jamaica is obliged to achieve its principal inflation objective in a manner that recognises the growth and employment objectives of the government,” the organisation said.

The JCC said it also noted that some key authorities, including the IMF and the US Federal Reserve, see the current spike in inflation as “transitory” due to supply chain issues caused by the pandemic.

”While a number of emerging market Central Banks have indeed raised interest rates this year, Jamaica is almost unique in the world in terms of our fiscal tightness, including in comparison to developed countries who for the most part have not yet raised their interest rates as they view the current rise in inflation as transitory,” the statement explained.

”As long as the Jamaican economy remains depressed due to the COVID shock, we would suggest the Bank of Jamaica follows the developed country timetable to interest rate tightening, particularly that of the US,” it added.

The JCC added that a partnership approach to supporting the banking system is still needed so it can in turn continue to support both companies and individuals still badly affected by the COVID crisis.

”We strongly support the planned move by the Bank of Jamaica to minimise unnecessary and erratic movements in the exchange rate,” it said.

”We have been arguing for many years that the response of businessmen to excessive exchange rate volatility, hedging their foreign exposure by increasing the foreign exchange rate at which they price their goods, often by between $5 and $7 above the current exchange rate, while entirely rational from an individual perspective (as Governor Richard Byles himself observed at the recent Bank of Jamaica press conference), is sub-optimal from a policy perspective,” the organisation added.

According to the JCC, the BOJ has more than sufficient reserves to achieve to smooth these predictable capital flows and done correctly would cost it neither reserves nor credibility.