The Bank of Jamaica (BOJ) Friday said it will keep its policy rate unchanged at 7 per cent for the next eight weeks but signalled rate hikes could resume, “if the emerging risks to inflation materialise”.

The “emerging risks” identified by the central bank include “higher-than-projected future wage adjustments in the context of the tight domestic labour market, second-round effects from the sharp increase in agricultural price inflation over the first half of 2023, worsening supply chain conditions and continued increases in world oil prices”.

So far, inflation has been ticking up in each of the last four months — May (6.1 per cent), June (6.3 per cent), July (6.6 per cent), and August (6.8 per cent). The BOJ has so far projected that the September inflation rate will show the upward trend continuing, “supported by higher agricultural prices, education costs, oil prices, and wage pressures”. That data is expected around the National Heroes holiday.

That indication aside, it is what is happening to core inflation which is seemingly piquing the central bank’s interest. Core inflation represents the long run trend in the price level and does that by stripping out volatile price increases mostly seen for products such as oil and food. And what the core figures are showing now — that long-run trend — is not good.

The BOJ notes accompanying the monetary policy decision showed core inflation increased to 5.6 per cent in August up from 5.5 per cent in July, creeping closer to the top end of the overall inflation target range of 4 per cent to 6 per cent.

Added to that, the business sector in an August survey said it expects inflation to increase over the next 12 months to 8.8 per cent relative to 8.3 per cent at May 2023.

Seeing that trend, the BOJ signalled that it could start “further tightening of monetary policy”, meaning, to any reasonable person, that it could start hiking its policy rate again. The rate was last increased in November last year to 7 per cent and has been at that level ever since. The central bank was, however, quick to point out that any action “will depend on incoming data”. Its powerful rate settling Monetary Policy Committee (MPC) meets next on November 21.