THE Bank of Jamaica (BOJ) is shoring up the island’s financial stability in the wake of Hurricane Melissa, facilitating billions of dollars in emergency cash and waiving key transaction fees to ensure the flow of money through a disrupted banking system, even as it held its key interest rate steady.

The central bank’s measures, announced by Governor Richard Byles following the Monetary Policy Committee’s decision to maintain the policy rate at 5.75 per cent, aim to prevent economic paralysis as communities struggle with widespread banking disruptions. To stabilise the financial system, the BOJ has facilitated $3.9 billion in emergency cash for commercial banks, waived associated penalties until December 31, and eliminated processing fees for its real-time gross settlement (RTGS) system on over 240,000 digital transactions so far, Byles said in a video statement to the nation late Monday.

In that statement Governor Byles gave assurances that “the country’s financial system remains operational, payment services are functional”, while acknowledging that “financial stability remains a top priority for the central bank”. He noted that the crisis has forced a reliance on physical cash, stating, “We understand, too, that in the aftermath of the hurricane, Jamaicans will be relying more on cash in order to conduct their daily transactions.”

The emergency measures respond to a severe breakdown in banking access, particularly in western parishes hardest hit by the hurricane. As of November 18, the BOJ reported that bank branch recovery levels were as low as 25 per cent in Trelawny and 33 per cent in Westmoreland, while ATM availability was just 31 per cent in Hanover and 38 per cent in Trelawny. This contrasts sharply with full recovery rates of 100 per cent in branches in Clarendon and St. Andrew, and for ATMs in Kingston.

Byles acknowledged that the pace of recovery is hampered by more than just infrastructure. “The continuing lack of electricity in some areas and physical damage to buildings and equipment, will affect the pace at which they eventually return to full service levels,” he said, noting that many bank staff are also experiencing significant loss and dislocation, further straining the system’s capacity to restore services.

While ensuring this financial stability remains a “top priority”, he delivered a sobering message on the cost of living, projecting that inflation will sharply exceed the bank’s 4-6 per cent target before only returning to the range by 2027. This signals a prolonged period of financial pressure for consumers, marking a stark reversal after a period of relative price stability.

He framed the central bank’s dual strategy as essential for protecting the most vulnerable Jamaicans. He noted that while the BOJ has “heard the calls from some sectors for the central bank to signal a different path for interest rates”, its decision to hold the rate at 5.75 per cent was made to “benefit the widest cross section of the Jamaican people”.

The decision comes as the hurricane has completely upended the economic outlook. The economy, which was previously estimated to have grown by three to four per cent in the September quarter, is now projected to contract significantly due to extensive storm damage.

The bank’s view is that the initial inflation spike is a supply-side shock driven by damage to major food-producing parishes, which higher interest rates cannot directly fix. This is compounded by the Government’s temporary suspension of fiscal rules, which is expected to inject additional spending into the economy.

This financial lifeline runs parallel to the central bank’s efforts to contain inflation. The BOJ has also sold US$210 million into the foreign exchange market since the hurricane to maintain currency stability, a move backed by what it calls “strong international reserves”. Going forward, the bank will also provide foreign currency directly to selected entities in the energy sector to prevent large purchases from distorting the market and driving up the cost of crucial reconstruction imports.

The BOJ has committed to continuing its support and monitoring of the financial system’s recovery and will report updates to the public. The central bank’s next policy decision announcement is scheduled for December 18, 2025, at which point it may reassess its stance based on the evolving situation.