The Bank of Jamaica today lowered interest rate payable on 30-day certificates of deposit (CDs) by 50 basis points to 6.75 per cent.

The reduction is the eighth adjustment in just over a year, which brought the rate down from 10.5 per cent at the beginning of 2010 — a 375 basis points reduction.

The central bank said the reduction reflects the trend decline in inflation towards the programme projections for the fiscal year and the prospect of even lower headline inflation in FY2011/12.

“While international prices for agricultural commodities and oil have become more volatile, domestic demand conditions have been weaker than earlier anticipated and have suppressed core, or underlying, inflation in the Jamaican economy,” said its press release issued yesterday.

The release added: “The reduction in the 30-day rate at this time also anticipates a period of very liquid conditions in the money market arising from the payment of principal and interest on Government benchmark securities. At the same time, the Bank’s foreign reserves continue to perform above the benchmarks set in the financial programme and have today been boosted by the proceeds from the Government’s recent US$400 million bond issue.”