BOJ Lowers Commercial Lending Rate to 5.75%

The Bank of Jamaica, BOJ, has lowered interest rates by 25 basis points, effective Tuesday.

This will see the rate offered to commercial banks on deposits held at the central bank fall from 6 per cent to 5.75 per cent.

Chevon Campbell tells us more.

It’s the first reduction granted by the central bank in four months. The BOJ paused interest rates reductions in January in response to the erratic trade policies of the Trump-led US administration.

The resumption, approved unanimously by the BOJ’s Monetary Policy Committee, comes in response to continued stability in inflation and a favourable economic outlook.

According to the BOJ, the decision is underpinned by inflation figures that have remained within the bank’s target range of four to 6 per cent since September 2024.

The BOJ noted that recent inflation stability has been aided by the absence of previous increases in regulated prices, such as public transport fares, which have helped offset rising food prices.

In addition, the exchange rate, imported inflation, and private sector inflation expectations have all remained stable.

Looking ahead, the central bank projects that inflation will remain within its target range over the next two years, trending toward the lower end.

This outlook is based on assumptions of stable inflation expectations and a modest decline in global oil prices.

The BOJ also says the broader economic forecast also remains optimistic, with real GDP expected to recover in 2025, driven by rebounds in the mining, tourism, and construction sectors.

The central bank says employment levels remain high, and wage pressures are reportedly easing.

It says Jamaica’s current account is expected to remain in surplus, and the country’s international reserves are described as healthy and improving.

However, the BOJ cautioned that global uncertainties, particularly evolving policies in the United States, pose potential risks.