Bank of Jamaica cuts policy rate 25 bp to 5.50 %

Bank of Jamaica’s Monetary Policy Committee cut the policy rate offered on deposit-taking institutions’ current-account balances by 25 bp to 5.50 % effective 24 February 2026, judging that faster-than-expected recovery in agricultural supplies, a mild exchange-rate appreciation and easing second-round pressures will keep inflation broadly within the 4–6 % target over the next eight quarters, with only temporary breaches mid-2026. After a 25 bp reduction to 5.75 % in May 2025 the rate had been held steady until December, making this the first move in nine months. The Committee will continue “proactive” operations to preserve foreign-exchange stability. Annual headline inflation fell to 3.9 % in January from 4.5 % in December, with core inflation also easing to 3.9 %; inflation expectations are projected to normalise, while real GDP is expected to contract by 1–3 % in FY 2025/26 before rebounding to 1–3 % growth in FY 2026/27 amid balanced inflation risks and downside-skewed growth risks. Private-sector credit growth has been steady, led by household borrowing, and the banking system remains well capitalised and liquid. Although hurricane-related rebuilding will widen the current-account deficit in the near term, international reserves are deemed healthy and set to strengthen further. Global considerations include a January hold by the US Federal Reserve at 3.50–3.75 % and rising oil prices driven by US–Iran tensions, partially offset by lower grains and LNG prices. The MPC rei