THE central bank is forecasting that inflation could rise above the upper limit of its four to six per cent target range during the June and September 2026 quarters.

According to the Bank of Jamaica (BOJ), rising international oil prices are already placing upward pressure on electricity and transportation costs in Jamaica, with domestic fuel prices reflecting increases linked to ongoing geopolitical instability.

“The extent of the breach of the inflation target range will depend on the severity and duration of the Middle East conflict,” said BOJ Governor Richard Byles during a recent press briefing.

Risks to the outlook remain elevated. Among the upside risks identified were the potential effects of El Niño weather conditions on agricultural prices, as well as stronger-than-anticipated domestic demand linked to post-hurricane recovery activities. On the downside, the BOJ said persistently high energy costs could dampen consumer demand by reducing disposable income available for other spending.

Headline inflation is expected to gradually moderate once geopolitical tensions ease and global oil supplies return to more normal levels. Headline inflation in April 2026 stood at 4.3 per cent, remaining within the BOJ’s target range.

Despite the projected breach, the BOJ said current inflation conditions remain broadly contained for now. The Monetary Policy Committee (MPC) voted unanimously to hold interest rates steady at 5.50 per cent, while continuing special foreign exchange measures aimed at preserving stability in the local market.

Byles said the current monetary policy stance remains appropriate despite the projected breach, arguing that the central bank’s actions are aimed at limiting what economists refer to as “second-round effects”, wherein higher fuel and transport costs begin feeding into broader price increases across the economy.

“The recent geopolitical tensions have introduced significant uncertainty and challenges to the economic outlook. However, the Bank of Jamaica remains committed to its primary mandate of maintaining price stability,” said Byles.

During a question-and-answer session following the briefing, Bank of Jamaica Governor Richard Byles also dismissed suggestions that the central bank could shift its inflation target range in response to mounting global uncertainty. According to Byles, the current four to six per cent target, which was established by the Government on the technical advice of the BOJ, remains appropriate for the domestic economy and is unlikely to change at this time.

“If we move that range down it means we would have to tighten — that means higher interest rates. And if we move the range up it means we could loosen, lower interest rates — then inflation would be higher and that would be a burden on Jamaicans,” Byles said. “I think that the range we’re in is appropriate and I don’t think that the circumstances globally require us to make that change at this time.”

Jamaica has officially targeted inflation within a four to six per cent range since 2017, with the framework becoming more firmly embedded in law following amendments to the Bank of Jamaica Act in 2020 that strengthened the central bank’s independence and inflation-targeting mandate.

While the BOJ has not maintained inflation within the target band consistently throughout the period, the central bank has described the framework as largely successful overall. Among the breaches recorded were inflationary spikes during 2017 and 2018, when heavy rainfall and flooding contributed to higher agricultural prices, pushing inflation above the upper limit of the target range.

Inflation also surged sharply between 2021 and 2023 during the post-pandemic global inflation crisis, driven by rising shipping costs, higher oil and food prices, supply chain disruptions, and the Russia-Ukraine war. According to previous BOJ reports, inflation peaked at approximately 11.8 per cent in April 2022, marking one of the highest inflation outturns in recent years.