Jamaica Maintains Stable Monetary Policy Amid Lower Inflation

In its latest quarterly update, the Bank of Jamaica has reaffirmed its commitment to steady monetary policy as the country experiences a period of low inflation and continued economic growth.

The Monetary Policy Committee decided to keep the policy rate at 5.75 percent per annum, citing the containment of inflation within its target range of 4.0 to 6.0 percent over the next two years. Recent data showed headline inflation at 3.3 percent in July 2025, below both last year's figure and the lower limit of the bank's target. This reduction reflects short-term factors such as prior increases in public transport fares no longer impacting prices, a lower general consumption tax on electricity, and faster declines in agricultural prices as conditions in the sector improved. Core inflation also remained subdued at 4.3 percent. Despite these temporary influences, the Bank expects inflation to trend back towards its target as their effects dissipate.

The foreign exchange market saw some volatility, with the Jamaican dollar depreciating 2.5 percent against major currencies since the end of last year. This was attributed in part to external uncertainty and shifts in market expectations, but strong fundamentals and the Bank’s currency interventions have worked to stabilize the market. The country's international reserves remain at a historically high level of $6.2 billion, bolstered by strong tourism revenues and remittance inflows. Economic growth continues, with the Bank estimating GDP expansion of up to 2.0 percent in the latest quarter and projecting a further recovery, particularly in agriculture, mining, and tourism.

Looking ahead, the Bank notes that uncertainties—such as potential changes in US trade policy and global geopolitical risks—could impact Jamaica’s economic outlook and inflation trajectory. Even so, the current forecast anticipates inflation remaining modest in the near term, with a gradual return to the target range, alongside continued economic growth and high employment.

This approach underlines the central bank's ongoing commitment to price stability and prudent policy management as Jamaica navigates both domestic challenges and global uncertainties.