The Bank of Jamaica (BOJ) Monetary Policy Committee (MPC) has unanimously agreed to reduce the policy rate by 25 basis points from six per cent to 5.75 per cent per annum, effective May 21.

The policy rate is offered to deposit-taking institutions (DTIs) on overnight placements with the BOJ.

Central Bank Governor, Richard Byles, speaking during the Quarterly Monetary Policy Report press conference at the Jamaica Conference Centre in downtown Kingston on May 21, said the decision was taken after careful consideration of the implications of global developments, recent economic trends, and the outlook for the Jamaican economy.

The Governor pointed out that the incoming economic data on Jamaica continues to point to a stable domestic economy with inflation remaining in the four per cent to six per cent target range.

“On the 15th of May, the Statistical Institute of Jamaica (STATIN) reported that headline inflation as at April 2025 was 5.3 per cent, in line with the out-turn for April 2024. Headline inflation has, therefore, continued to remain within the Bank of Jamaica’s target. Also, core or underlying inflation remains low,” he pointed out.

He further noted that core inflation, which excludes the prices of agricultural food products and fuel from the consumer price index, was 4.4 per cent at April 2025, remaining below six per cent since July 2023.

“The stable and relatively low inflation out-turn primarily reflected the end of the impact of previous price increases for regulated items, such as bus and taxi fares, and no new such increases, which offset higher food inflation. Moreover, the exchange rate, imported inflation and the private sector’s expectations of future inflation have been fairly stable,” he said.

Governor Byles said the MPC also agreed to preserve relative stability in the foreign exchange market.

He noted that expectations about exchange rate depreciation have remained fairly stable.

“At the 14th of May 2025, the exchange rate had depreciated on a year-over-year basis by 1.9 per cent. There was a mild uptick in the pace of depreciation between end April and early May in the context of a slight increase in demand and a build-up of foreign exchange positions by authorised dealers.

“In response, the Bank augmented flows in the market. Cumulatively, BOJ has sold US$1.1 billion via the BOJ-Foreign Exchange Intervention & Trading Tool (B-FXITT) facility over the 12 months to the end of April 2025, compared to US$983 million over the 12 months to the end of April 2024. However, it is important to note that the Bank net purchased approximately US$1.1 billion over the 12-month period to April 2025,” he said.

Mr. Byles noted, further, that as at 14th of May, Jamaica’s gross international reserves remains healthy, amounting to US$5.9 billion or 135 per cent of the measure considered adequate.

He said there has been moderation in imported inflation in the March 2025 quarter relative to the December 2024 quarter, noting that, specifically, oil prices declined during the quarter relative to the previous year.

“The Bank estimates that the domestic economy grew in the range of 0.0 to 1.0 per cent for the March 2025 quarter, which translates into an estimated contraction of -1.0 to -0.5 per cent for the financial year 2024/25. Finally, while employment levels remain high, anecdotal data suggest that wage pressures are moderating,” he added.

By: Chris Patterson, JIS

Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wayne Henry said it is projected that the economy will grow within the range of 0.5 per cent to 1.5 per cent in April to June 2025, relative to April to June 2024.

The Director General explained that this performance will be supported by increased output in agriculture, due to the continued strengthening in domestic crop production and a reduction in the drag on growth from the export crop component as longer-term crops begin to recover.

Hotels & Restaurants are also expected to contribute to growth, largely due to the anticipated increase in stopover arrivals associated with events such as spring break, Easter holidays and Jamaica carnival.

Construction will also be a growth driver due to the impact of the rollout of infrastructure projects at the start of the new fiscal year to include roadworks and residential and non-residential construction activities, Dr. Henry said.

He noted that growth will also be supported by increased domestic demand due to relatively high levels of employment and increased consumer confidence.

“Preliminary data for the quarter indicate some positive movements in support of this projection. Preliminary data on airport arrivals for April 2025 indicate an increase of 5.3 per cent relative to April 2024. However, for the Mining & Quarrying industry, data for April indicates that the heavier weighted alumina production contracted by 12.3 per cent, while crude bauxite production increased by 3.9 per cent,” he explained.

The projection for Fiscal Year 2025/26 is for growth within the range of one to two per cent.

The Director General said that all industries are forecast to record growth, as the recovery from the weather-related shocks in 2024 will become more pronounced in the latter half of calendar year 2025.

He advised that the downside risks to this positive outlook include unplanned factory downtime associated with aged production plants, particularly in the Mining & Quarrying and Manufacturing industries, weather-related shocks associated with the start of the hurricane season, and lower-than-anticipated external demand for Jamaican goods.

By: Judana Murphy, JIS