Jamaican News

BOJ says 4.3 Per Cent Inflation Rate in July Was Within Target Range

The Bank of Jamaica (BOJ) says the 4.3 per cent rate of inflation recorded for July 2019 represents the third consecutive month that the out-turn remained within the institution’s four to six per cent target range.

In a statement on Tuesday (August 27), the Central Bank said the marginal 0.1 per cent uptick, which was 1.1 per cent higher than the corresponding period last year, mainly reflected the impact of increases in the prices of food and electricity rates.

However, the BOJ anticipates that inflation will decline to 3.7 per cent in September, consequent on a fall in energy prices, before rising to 4.7 per cent in December as food prices spike, consequent on hot and dry weather conditions.

“Inflation is expected to be supported by continued growth in domestic economic activity, partly in response to the lowering of the policy rate over the last eight quarters,” the Central Bank statement said.

Meanwhile, the BOJ projects that inflation will remain low, within the three to five per cent range, over the March 2020 to June 2021 quarters.

This, the Bank noted, mainly reflecting the effect of lower oil prices, more efficient domestic energy generation, and low inflation among Jamaica’s main trading partners.

The BOJ pointed out, however, that the impact of its past monetary accommodation is expected to offset the influence of these factors.

“Inflation is projected to return to the midpoint of the target slowly over the ensuing three years. This outlook, however, carries a material risk that inflation will fall below the target again during that period, in the absence of a policy response,” the Central Bank statement further stated.

This aside, the BOJ said other macroeconomic variables remain positive.

It noted that foreign reserves are adequate, the current account of the balance of payments remains sustainable, market interest rates are low, labour market conditions continue to improve, “and the fiscal performance is strong”.



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