The Bank of Jamaica (BOJ) ,in its Quarterly Monetary Policy report published in the week past, reported that liquidity conditions worsened during the March 2022 quarter, relative to the December 2021 quarter.

This was indicated by the maintenance of average current account balances at BOJ of $49.5 billion by deposit-taking institutions (DTIs) and primary dealers, below the average of $71.4 billion for the preceding quarter.

The BOJ said that the liquidity conditions over the March 2022 quarter were less buoyant, relative to the bank’s projections. Deposit-taking institutions’ (DTIs) average current account balances for the quarter were lower than projected by $12.1 billion.

The BOJ outlined, “The lower than anticipated balances primarily reflected stronger than expected absorption from GOJ operations, supported by weaker than projected injection from BOJ operations.”

The BOJ conducted 13 auctions of 30-day CDs during the review quarter. The average offer size during the March 2022 quarter was $13.4 billion, above the average of $10.2 billion for the December 2021 quarter.

The increase reflected the actions of the central bank to manage liquidity levels in the financial market. Consistent with the monetary policy stance, the average yield on these operations for the review quarter increased to 5.10 per cent, 98 bps above the average for the December 2021 quarter. The BOJ did not conduct any 14-day repurchase operation during the March 2022 quarter.

The central bank noted that the weaker-than-anticipated currency issue partly reflected tight liquidity conditions, prompting institutions to hold less vault cash. The out-turn influenced a downward revision to the currency forecast.

The BOJ noted that significant foreign currency demand during the March 2022 quarter, and the associated fluctuations in market conditions, necessitated BOJ’s foreign currency sales of US$430.4 million via the B-FXITT facility and other market sales, along with US$17.5 billion in swap arrangements. While there were repayments of USD CDs, there were no new issues during the review period.