- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 6%
Bank of Jamaica’s Monetary Policy Committee kept the policy rate at 6.00 % in its 27 March 2025 decision, judging the stance sufficient to maintain inflation within the 4–6 % target over the next two years, and simultaneously narrowed the corridor by lowering the Standing Liquidity Facility rate to 7.00 % from 8.00 % to steady short-term market rates and preserve foreign-exchange stability. The rate was likewise left unchanged at 6.00 % in February 2025. Annual headline inflation eased to 4.4 % in February from 6.2 % a year earlier, while core inflation stood at 3.8 %, aided by a stable exchange rate, a surplus on the external accounts, softer wage pressures and lower global commodity prices. The Committee warned, however, that recently announced US trade policy changes and retaliatory measures by China and Canada, alongside the US Federal Reserve’s decision to hold its target range at 4.25–4.50 %, pose upside risks to imported inflation. Reaffirming its commitment to low and stable prices, the MPC will keep the current stance until external uncertainties abate but signalled readiness to act should inflation threaten to deviate from target; the next policy decision is due on 20 May 2025.
Rate evolution
From June 2025 to August 2026, Bank of Jamaica lowered the policy rate by 25 basis points, from 5.75% to 5.50%, after an extended hold at 5.75% through late 2025, a February 2026 cut and subsequent pauses. Early in the period, it judged the stance appropriate because headline inflation was either within or below the 4.0% to 6.0% target largely for temporary reasons, core inflation remained around target, demand and growth were improving, and the labour market was tight, even as global trade policy, geopolitical tensions and foreign exchange volatility kept risks skewed to the upside and prompted continued foreign exchange stabilisation measures. That assessment shifted after Hurricane Melissa, when the Bank held at 5.75% despite a projected contraction because the inflation shock was seen as supply-driven, with higher food prices, second-round effects, reconstruction spending and suspended fiscal rules raising upside risks, before cutting to 5.50% in February as agricultural supplies recovered faster than expected, the exchange rate appreciated mildly, inflation undershot projections and risks became balanced.
In subsequent decisions, Bank of Jamaica kept the rate at 5.50% as Middle East conflict lifted oil, liquefied natural gas, fertiliser and shipping costs, raising the risk of second-round inflation while weighing on growth. It maintained that stance on 25 and 26 June 2026 as inflation remained within target but the outlook stayed uncertain, geopolitical risks remained elevated and international commodity prices threatened later second-round increases, with headline inflation rising to 5.5% in May and core inflation to 4.7%. At its meetings on 14 and 17 August 2026, the Bank unanimously held the rate at 5.50% and continued measures to preserve relative stability in the foreign exchange market, judging the stance appropriate to limit second-round price increases after headline inflation rose to 7.5% in July and core inflation to 5.2%, while unresolved Middle East tensions, the intensifying Russia-Ukraine war, domestic demand pressures and worsening drought and heat conditions kept near-term inflation above the target range and risks skewed to the upside despite exchange-rate stability.