Bank of Jamaica reduces policy interest rate

The Bank of Jamaica (BOJ) on Wednesday reduced its interest rate on 30-day certificates of deposit to 4.75% from 5%.

The change to the policy rate came following the central bank's assessment that inflation in FY2017/18 would fall within its target range of 4% to 6%, local daily the Jamaica Observer reported, citing the lender.

"This assessment has been reinforced by the government's strong commitment to maintaining a 7% primary surplus for FY2017/18 and to meet the overall public sector fiscal targets under the precautionary stand-by arrangement, as approved by parliament," the BOJ was quoted as saying in a statement. "The continued tight fiscal policy posture supports an easing in monetary conditions."

The bank also noted that, thanks to "a strong reform program and a favorable external environment," the country's main economic indicators have continued on a positive trajectory.

"Economic activity continues to expand, although at a slower pace than its potential rate of growth," the bank was quoted as saying. "Other key macroeconomic indicators have been reflecting generally positive trends: inflation expectations remain firmly anchored in single digits, international reserves remain strong, the current account of the balance of payments is projected to remain at a sustainable level, private sector credit is expanding strongly, and market interest rates have been trending downwards."