- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 5.5%
The Bank of Jamaica’s Monetary Policy Committee maintained the policy rate at 5.50% as it judged the current stance appropriate to contain second-round price pressures from recent increases in international commodity prices, even though inflation has stayed within the 4.0% to 6.0% target range over the past three months and the outlook remains uncertain. The central bank will also continue measures to preserve relative stability in the foreign exchange market. Headline inflation rose to 5.5% in May 2026, above the Bank of Jamaica’s most recent projection and marking a fourth straight monthly increase since the start of 2026, while inflation is projected to keep rising and temporarily breach the top of the target band in the near term; gross domestic product growth is still expected within 1.0% to 3.0% in fiscal year 2026/27 despite downside risks, and businesses’ 12-month-ahead inflation expectations were stable at 7.0% in May. International reserves were described as healthy, with the foreign exchange rate stable and showing marginal appreciation for the calendar year to 26 June 2026. The Committee said geopolitical tensions in the Middle East, still-elevated and volatile commodity prices, and tighter United States financial conditions continue to cloud the outlook, and it reiterated that it will closely monitor incoming data and is prepared to adjust its monetary policy stance if upside inflation risks materialise.
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.