- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 5.5%
Bank of Jamaica’s Monetary Policy Committee left its policy rate—the rate on deposit-taking institutions’ current account balances—unchanged at 5.50 % at its 27–30 March 2026 meetings, judging the existing stance appropriate as headline inflation, though at 3.9 % in February and still below the 4–6 % target band, is now projected to rise and may exceed the corridor during 2026 amid a sharp, conflict-driven surge in global energy and other commodity prices that also threatens domestic growth. Following a cumulative 50 bp of easing since May 2025, most recently a 25 bp cut in February 2026, the Committee will maintain special liquidity operations that include direct foreign-exchange provision to key energy importers to anchor market stability. Core inflation is expected to climb above target this year, while upside risks dominate the eight-quarter outlook owing to the possibility of a wider or prolonged Middle East conflict, higher inflation expectations and post-hurricane reconstruction spending, although reduced demand from weaker purchasing power could temper pressures. Jamaica’s sizeable international reserves are viewed as an ample buffer for FX supply. The MPC cited elevated global uncertainty, particularly the commodity price effects of the regional conflict, and signalled it stands ready to tighten if second-round price effects emerge that jeopardise the inflation target.
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.