Reduced inflation moves Bank of Jamaica to cut benchmark Interest rates

Inflation in Jamaica has hit its lowest point in 48 years at 4 percent, prompting the country’s central bank – the Bank of Jamaica to cut its policy rate by 25 basis points, saying it expects consumer prices to remain low over the next year.

The Bank of Jamaica has reduced the benchmark rate on the 30-day Certificate of Deposit from 5.75 percent to 5.5 percent, effective April 17.

“The recently announced inflation rate of 4.0 percent for fiscal year 2014/15 is the lowest in 48 years. The sharper than expected decline in inflation was due in part to the fall in global oil prices but also to the moderation in price increases that has resulted from fiscal consolidation and economic reforms,” the country’s financial regulator said in a statement issued late Thursday.

“The impact of these changes will help to moderate inflation impulses over the medium term.”

The Statistical Institute of Jamaica recorded 4 months of deflation from November 2014 to February 2015. In March, the rate was 0.5 percent, but annual headline inflation declined to 4.0 percent, compared to the annual rate of 4.5 percent in February.

Source: Jamaica Gleaner