The Bank of Jamaica (BOJ) held its benchmark interest rate at 5.75 per cent on Monday, signalling confidence that inflation will stay within target despite global risks but cautioning that price pressures could intensify.

The central bank’s Monetary Policy Committee (MPC) unanimously agreed to maintain the policy rate — the rate offered to deposit-taking institutions for overnight placements with the BOJ. It deemed the current stance “appropriate to support inflation remaining within the target range” of four to six per cent over the next two years. The MPC also committed to “continue taking measures to preserve relative stability in the foreign exchange market”.

Annual headline inflation held steady at 5.2 per cent in May 2025, unchanged from a year earlier and within the target band since September 2024. Core inflation — excluding volatile food and fuel — stood at 4.6 per cent, below the six per cent ceiling for 23 consecutive months. Despite this stability, the MPC warned that “risks to the inflation forecast are skewed to the upside” due to “continued uncertainty around global trade policy and the path of interest rates in the major developed markets, as well as recent geopolitical developments”.

Among the key concerns highlighted by the central bank are geopolitical tensions which, it points out, could reverse recent declines in grain, oil, and liquefied natural gas prices, which had provided relief. It also warned that second-round impact[s] of recent changes in global trade policy could be higher than anticipated.

Also worrying the central bank is US inflation which, at 2.4 per cent in May, remains above the Federal Reserve’s two per cent target, influencing global financial conditions

Still, it outlines mitigating factors that could help dampen its concern. Those include that the private-sector’s inflation expectations stabilised at 7.2 per cent while the domestic banking system, described as “sound with adequate capital and liquidity”, is also of help. At the same time fiscal policy — that is the Government’s spending plans ahead of an impending general election due in a few months’ time — “poses no near-term risk to inflation”.

On the matter of growth, the BOJ projected economic recovery in fiscal year 2025/26, with real GDP growth forecast at 1.0 per cent to 3.0 per cent, driven by expansions in mining, tourism, and construction. Preliminary indicators suggest growth resumed in the June 2025 quarter.

Reaffirming its commitment, the MPC stated it “will deploy the tools necessary to preserve stability” and “continue to monitor the incoming data and adjust its policy accordingly”.

The next policy decision will be announced on August 20.