- 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 current account balances—unchanged at 5.75 % at its September 2025 meeting, judging the existing stance adequate to guide inflation back into the 4–6 % target range amid still-firm domestic demand, temporarily low headline inflation and elevated external uncertainties. After a 25 bp cut in May 2025, the rate has been held steady at 5.75 % at the June, August and now September decisions. The Committee will also maintain operations aimed at preserving foreign-exchange market stability. Headline inflation decelerated to 1.2 % in August, well below target because of temporary supply-side factors such as lower agricultural prices, fading public-transport fare effects and the March 2025 cut in the electricity GCT, while core inflation stayed within target at 4.2 %. Economic activity expanded in the March, June and estimated September quarters, with September-quarter GDP seen rising 3–4 %, supported by a tight labour market and elevated wage growth, and growth is expected to persist over the next two years. The current-account surplus and “healthy” international reserves, alongside a wider domestic-external interest-rate differential as overseas yields fall, underpin foreign-exchange stability. Globally, lingering geopolitical tensions and prospective tariff increases pose upside risks to imported inflation. The MPC reiterated that inflation risks remain skewed upward but vowed to adjust policy if needed, while intensifying monitoring of core inflation relative to the lower bound of the target range ahead of its 20 November 2025 decision.
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.