KINGSTON, Jamaica – The Bank of Jamaica (BOJ) cut interest rates by 25 basis points (bps) to 6.50 per cent per annum, in a move the central bank said Monday is based on an improvement in the inflation outlook.

“Annual headline inflation at August 2024, as reported by the Statistical Institute of Jamaica (STATIN), was 6.5 per cent, higher than the 5.1 per cent at July 2024. This outturn was in line with the most recent forecast and above the bank’s target range of four to six per cent.

“Despite the increase in headline inflation, the measure of core inflation that excludes the prices of agricultural food products and fuel was 4.3 per cent at August 2024, continuing the lowering of underlying inflation since the start of 2024,” the BOJ said in a press release.

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The BOJ said its projected path for inflation over the next eight quarters is likely to be revised downward.

“Recent developments suggest that headline inflation will return to the bank’s target range earlier than initially forecast. This outlook largely reflects the possibility of a lower-than anticipated impact of Hurricane Beryl on agricultural supplies.

“Additionally, some key drivers of headline inflation continued to moderate in the context of falling international commodity prices. The lagged effect of the Bank’s monetary policy posture over the past three years should also continue to dampen domestic demand and wage pressures. The net flow of new domestic currency loans to the private sector (expressed in constant prices) for July 2024 also continued to moderate,” the central bank said.

Inflation expectations in Jamaica have been on a consistent downward path and the exchange rate has been relatively stable, the BOJ noted.

“In this regard, inflation is expected to settle within the bank’s target range over the forecast horizon, with the exception of the next two to three months. There is, however, an ongoing upside risk to the inflation projection in the context of the current active hurricane season,” said the central bank.