- Following its Monetary Policy Committee (MPC) meetings on June 25 and 26, 2025, the Bank of Jamaica (BOJ) announced that it has maintained its policy rate at 5.75%. This pause follows a previous 25bps rate cut in May 2025. The decision was made on the balance of a run of stable inflation since last September and uncertainties from global trade policies, interest rate paths in major economies, and recent geopolitical tensions that pose upside risks to inflation.
- Inflation has remained stable within the Bank’s target range of 4.0 to 6.0% since September 2024. Annual headline inflation in May 2025, as reported by the Statistical Institute of Jamaica (STATIN), was 5.2%, in line with the outturn in May 2024. Core inflation (which excludes the prices of agricultural food products and fuel from the consumer price index (CPI) was 4.6% for May 2025, remaining below the upper limit of the target since July 2023.
- The BOJ expects inflation to remain within its target range of 4.0% to 6.0% over the next eight quarters. The private sector’s expectations for future inflation, a key driver of headline inflation, have stabilised. Meanwhile, international drivers of headline inflation, such as grains, liquefied natural gas, and oil prices, have generally trended down.
- Still, risks to the inflation forecast are skewed to the upside, which means that inflation could be higher than projected. Most notably, geopolitical tensions, if prolonged or intensified, could cause upward pressures on international commodity prices. Additionally, while the direct impact of recent changes in global trade policy on domestic inflation is expected to be moderate, the second-round impact of these policies could be higher than anticipated.
- That said, the MPC communicated that it would continue to monitor the incoming data and adjust its policy accordingly at subsequent meetings.
(Source: BOJ)