LOCAL business executives are zoning in on how inflation and the Bank of Jamaica’s (BOJ) policy responses are impacting investments, businesses and lifestyles.

Speaking at Sterling’s recent investor briefing, VP of trading and investments at Sterling Asset Management, Marian Ross-Ammar explained, “If you went to the supermarket in 2021 and you bought a basket of goods costing $100, in 2022 if you went to the same supermarket and bought the same basket of goods, it would cost $110.20 — this is what a 10.2 per cent inflation rate looks like.”

Ross-Ammar pointed out her analogy may seem negligible to some persons, but “if you multiply that impact across every purchase, every transaction you make, then the effect becomes significant”.

As a result, she said all our plans for the future — whether to buy a home, retire or invest in your business — must be adjusted for inflation.

In the meantime, lecturer in the Department of Economics at The UWI, Mona Dr Samuel Braithwaite highlighted that interest rates over the last decade were low.

He said in 2017 the central bank consistently lowered interest rates “all the way to 0.5 per cent, and I can’t recall any pushback against that”.

Then, the pandemic happened. He informed that inflation is further impacted when demand is high but supply is stagnant.

In addition, the 2022 Russian invasion of Ukraine has disrupted the world’s supply of wheat and oil, the trickle-down effect of which has been significant. He noted that a lot of Jamaica’s inflation is externally driven.

While addressing the latest decision by the Bank of Jamaica (BOJ) to add 50 basis points to its policy interest rate, bringing it to 6.5 per cent, ATL Pension Fund Executive Chairman Keith Collister said BOJ has limited tools to combat inflation, “but the tool we have is transmission mechanism”.

The transmission mechanism describes how, “changes made by the central bank to its monetary policy settings flow through to economic activity and inflation”, Collister continued.

He highlighted that the Jamaican dollar was one of the few currencies in the world that appreciated in value this year.

Meanwhile, Sterling Asset Management’s President and CEO Charles Ross pointed out that there has been a disconnect between official policy and what’s happening in the marketplace.

Ross noted that despite being a small economy, Jamaica doesn’t have to take prescribed steps as “the law of economics applies everywhere”.

According to Ross, the inflation we’re experiencing is a result of the pandemic in which “there’s too much money chasing too few goods”.

The BOJ’s efforts were lauded at the investor briefing, where it was shared how the Bank of England’s soaring interest rates have created financial turmoil.