NEWLY appointed Bank of Jamaica (BOJ) Governor Dr R Brian Langrin will take the reins at the central bank on Wednesday with inflation spiking above target and a decision due at the close of business on whether to change the central bank’s 5.50 per cent policy rate.

However, the decision is being deliberated before he takes office. The BOJ’s Monetary Policy Committee (MPC) began a two-day meeting Monday, during Richard Byles’ final two days as governor.

The bank will explain the decision and present its latest economic outlook at a press briefing next Thursday. The briefing was initially scheduled for this Thursday but has been pushed by to allow the new governor to settle in his chair.

Langrin will inherit an annual inflation rate that has climbed from 5.5 per cent in May to 6.7 per cent in June and 7.5 per cent in July, exceeding the upper limit of the BOJ’s four to six per cent target for a second consecutive month.

The spike, however, did not catch the central bank by surprise.

The BOJ said in June that inflation was expected to temporarily rise above the target in the near term. It maintained the policy rate to reduce the risk that the initial increases in fuel and other costs would spread to more goods and services.

The policy rate is the central bank’s main tool for influencing borrowing and saving costs across the economy. The BOJ has held it at 5.50 per cent since reducing it by 0.25 percentage point in February.

The MPC must now decide whether July’s increase is mainly a temporary result of higher fares, fuel and utilities or whether price pressures are spreading. Raising the rate could help curb inflation but add to borrowing costs; holding it would be consistent with the BOJ’s view that the breach will be temporary.

The Statistical Institute of Jamaica said consumer prices rose 1.2 per cent during July alone, driven mainly by a 6.3 per cent jump in transport costs after the second phase of increases in route taxi and hackney carriage fares took effect. Higher petrol prices also contributed.

Food and non-alcoholic beverage prices rose 0.6 per cent during the month, while housing, water, electricity, gas and other fuel costs increased 0.9 per cent.

Over the 12 months to July, transport costs increased 13.6 per cent, food and non-alcoholic beverages rose 9.4 per cent and housing and utility costs climbed 5.2 per cent.

Langrin previously served as the BOJ’s chief economist and later headed its Financial Stability Department. In the latter role, he advanced policy and institutional reforms and served as the Government’s technical lead on two sovereign debt restructurings.

He later held senior positions at the International Monetary Fund, Inter-American Development Bank and World Bank and, most recently, advised Caricom on modernising the region’s digital financial infrastructure.

Jamaica Bankers’ Association President Chorvelle Cunningham said the sector welcomed Langrin’s appointment.

“We stand ready to continue our partnership and engage on priorities central to stable economic growth in Jamaica,” she told the Jamaica Observer.

Opposition spokesman on finance Julian Robinson also welcomed the appointment, saying Langrin’s combination of BOJ and international experience meant he was “certainly qualified for the job”.

Robinson said that, in addition to maintaining monetary stability and keeping inflation within target over time, Langrin should improve the monetary transmission mechanism — the process through which BOJ rate changes influence the interest rates banks offer customers.

“That has been a complaint of previous governors, that the DTIs [deposit-taking institutions] are not responsive to the central bank,” Robinson said.

He added: “I welcome his appointment and we look forward to a productive relationship with him as governor of the bank.”