- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 5.75%
The Bank of Jamaica’s Monetary Policy Committee kept the policy rate—the rate offered to deposit-taking institutions on overnight placements—unchanged at 5.75 % at its 25–26 June meeting, assessing the existing stance as sufficient to keep inflation within the 4–6 % target over the next two years amid continued uncertainty over global trade policies, major-economy rate paths and heightened geopolitical risks. The hold follows a 25 bp cut in May that lowered the rate from 6.00 %. The MPC will also sustain its foreign-exchange operations to preserve market stability. Annual headline inflation was 5.2 % in May, matching the year-earlier reading and extending a run inside the target since September 2024; core inflation measured 4.6 %, while private-sector inflation expectations have steadied. The Bank noted that international prices for grains, LNG and oil have generally softened, though any escalation of geopolitical tensions could reverse that trend. Reaffirming its commitment to low and stable prices, the Committee said it will adjust policy if necessary and plans its next decision announcement on 20 August 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.