The Central Bank of the Bahamas released remarks by Governor John A Rolle delivered at the 2nd Biennial Macroeconometric Caribbean Conference, warning that shifts in the US trade policy landscape could revive inflation expectations and act as a near-term drag on growth, with knock-on effects for the Bahamas and wider Caribbean. The remarks placed these risks in the context of a softer global outlook, citing the International Monetary Fund projection of world output at about 3.3% in 2025 versus a 3.7% pre-COVID-19 two-decade average, and the Organisation for Economic Co-operation and Development downgrade of its 2025 and 2026 global growth forecasts by 20 and 30 basis points, respectively, alongside US growth projected at 2.2% in 2025 and 1.6% in 2026. For the Caribbean, the speech highlighted two channels of concern from tariff shifts: weaker prospects for Europe and North America lowering the outlook for tourism, and tariff-related price effects feeding through to imported goods and services sourced from the US. It also pointed to the continuing burden of past inflation, high fiscal indebtedness, declining total factor productivity, and heightened exposure to climate-related shocks and sea-level rise amid limited fiscal space. The conference, co-hosted with Indiana University’s Center for Applied Economics and Policy Research, is positioned as a forum for empirical research to inform policy responses, with participation including regional central bank governors, the president of the Federal Reserve Bank of New York (also vice chair of the Federal Open Market Committee), and the Bank for International Settlements Office of the Americas.
Central Bank of the Bahamas 2025-03-26
Central Bank of the Bahamas publishes Governor Rolle remarks on trade-policy-driven inflation risks and weaker tourism outlook
Central Bank of the Bahamas Governor John A Rolle warned at the 2nd Biennial Macroeconometric Caribbean Conference that US trade policy shifts could revive inflation expectations and hinder growth, affecting the Bahamas and the Caribbean. He noted concerns over weaker tourism prospects and tariff-related price effects, compounded by past inflation, high debt, and climate-related vulnerabilities. The conference, co-hosted with Indiana University, serves as a platform for empirical research to guide policy, featuring participation from regional central bank governors and international financial institutions.