The Principals of one of the country’s oldest investment firms, Barita, is defending the unwillingness of financial institutions to more readily pass on interest rate reductions to customers.
Several stakeholders including the Bank of Jamaica have raised concerns over the slow pass through as the Central Bank continues to lower its own rates in recent months.
However, in an interview with Nationwide News, Chief Executive Officer Designate Of Barita Financial Holding Company, Dane Brodber and Barita Chief Executive Officer, Ramon Small-Ferguson both sought to explain to Jamaicans the financial sector’s rationalisation.
Chevon Campbell tells us more.
As of December 2024 the Bank of Jamaica’s policy rate which is offered to financial institutions is six-percent.
It’s fallen from 7% in July, a position which the Central Bank had maintained for over two years.
The purpose of the high interest rate is to reduce the availability of liquidity in the market and restrict spending in order to fight inflation.
This impacts lending rates such as loans and mortgages.
With inflation low, the central bank is now reducing rates in order to spur growth.
However, financial institutions remain stubborn in their attempts to maintain relatively high interest rates.
Mr. Brodber argues that when interest rates climbed they were similarly slow in passing on the pain to their customers.
He sought to assure customers that rates will fall, but the sector must cautiously make its own adjustments.
Meanwhile Mr. Small-Ferguson argued it would not be prudent from a business perspective to immediately reduce rates.
Meanwhile, the Barita Principals, remain confident in the country’s fiscal stability despite increasing anxiety as the country heads into a election year.
According to Mr. Brodber, he largely expects both political parties to remain within long entrenched fiscal guidelines.
This is even after a potential leadership change.
Mr. Small-Ferguson is of a similar mindset.
Ramon Small-Ferguson, Barita Chief Executive Officer.
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