• Bank of Jamaica (BOJ) Governor, Richard Byles, says plans are advanced to develop and implement the use of a Central Bank Digital Currency (CBDC) locally. Speaking during the BOJ’s digital quarterly briefing on Friday, Mr. Byles said that over the last couple of months, the Bank undertook the requisite preliminary work relating to assessments and protocols for approval of the proposed digital currency through the government process.
• “So we are, hopefully, going to Cabinet for approval very shortly and will [thereafter] start a pilot in the second or third quarter of this year,” he informed.
• Byles advised that the pilot will “run for a couple of months” and “hopefully, conclude by about the end of this year”. Thereafter, he added, “we will be able to… publicly launch the digital currency in early 2022”.
• CBDC is a form of Central Bank-backed currency and is, therefore, legal tender. It is a fiat currency, which means it can be exchanged, dollar for dollar, with actual cash, and is issued to licensed deposit-taking institutions on a wholesale basis. Individuals, households and businesses can use it to pay for goods and services, as obtains with cash.

(Source: JIS News)

• Widespread vaccination is the key to overcoming the COVID-19 pandemic and bolstering economic recovery in Latin America, says Fitch Ratings in a special report. Some countries have re-imposed mobility restrictions, albeit more localized and less severe than during the initial outbreak, following the second wave of coronavirus cases and deaths in the region.
• The virus resurgence will adversely affect economic activity in Q1 2021, and the scope and pace of the recovery in H2 2021 will depend on the speed and effectiveness of vaccine rollouts. Social distancing measures are likely to be eased but not fully removed until H2 2021 or even 2022.
• Vaccination has begun slowly in much of the region, and limited vaccine supply and weak distribution networks pose challenges. Mexico, Peru, and Chile appear best placed in terms of vaccine agreement coverage as a share of their populations.
• A key risk for economic recovery is the prevalence of new variants that may be more contagious, have higher mortality, or be more resistant to the existing vaccines. Slower-than-expected distribution or production bottlenecks (some evidence of this exists in the EU) would further slow the vaccine rollout and delay the recovery.

(Source: Fitch Ratings)

• Following a historic contraction in 2020, the Peruvian economy will be one of the fastest-growing markets in Latin America in the coming quarters as rebounding private consumption and a surge in investment drive a recovery. 
• While Fitch Solutions is also upbeat on Peru's longer-term growth outlook, it highlights downside risks from the country's COVID-19 vaccine rollout and the April 2021 general election, particularly if the next government vows to re-evaluate the longstanding market-friendly status quo. 
• Fitch Solutions has revised its real GDP growth forecasts to 7.2% y-o-y in 2021 and 4.3% in 2022, from 6.3% and 4.2% previously. In 2020, the economy contracted 11.1%

(Source: Fitch Solutions)

• China’s Clover Biopharmaceuticals, a developer of coronavirus vaccines, has raised $230 million from investors, including Singapore’s state investment firm Temasek Holdings, it said on Tuesday, as it develops vaccines for variants.
• Clover, which has been developing a vaccine using an immune response-boosting ingredient made by U.S.-based Dynavax Technologies Corp, plans to start mid-to late-stage clinical trials in the first half of 2021.
• “We are working on broadly protective coronavirus vaccine approaches for variant strains of interest,” a spokeswoman said, without identifying the specific strains of SARS-CoV-2 to be targeted by the firm’s new candidates.

(Source: Reuters)

• Prime Minister Boris Johnson unveiled a map out of lockdown for England on Monday that would keep some businesses shuttered until the summer, saying caution was necessary to ensure there were no reversals on a “one-way road to freedom”.
• After imposing one of the strictest lockdowns in the western world in January to counter a highly contagious variant of the coronavirus, Johnson said Britain was now in a position to enjoy the fruits of one of the world’s fastest vaccine programs.
• Starting in two weeks with the reopening of schools, the phased plan will go through four stages, with at least five weeks in between each stage. The final step, when most restrictions will be lifted, will not start until June 21 at the earliest.

(Source: Reuters)

• According to the Statistical Institute of Jamaica (STATIN), consumer prices fell by -1.6% in January. The decline in the first month of the year resulted in the 12-month point-to-point inflation rate of 4.7%, down from 5.2% in the 12-months to December 2020.
• A  4.6% decline in the index for the heaviest weighted division, ‘Food and Non-Alcoholic Beverages’ and a 0.8% decrease in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division were behind the reduction in consumer prices.
• However, an increase of 0.7% in the ‘Transport’ index due to increased petrol prices tempered the overall decline in the CPI.
• The decrease in the food and Non-Alcoholic Beverages’ division was due primarily to the 17.8% fall in the index of the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’ as a result of lower prices for some agricultural produce aided by a recovery in production after the damaging effects of heavy rains in October and December 2020.
• Considering this, inflation for the fiscal-year-to-date (April 2020 – January 2021) was 3.4%.
• At 4.7%, inflation remained within the BOJ’s 4%-6% target range for the 7th consecutive month.

(Source: STATIN)

• Bank of Jamaica made the decision to hold the policy interest rate (the rate offered on overnight balances at Bank of Jamaica) unchanged at 0.50% per annum for the 18^th consecutive month.
• The decision to hold the policy rate unchanged reflects BOJ’s assessment that inflation will average 5.0% over the next two years and remain within the target range. This forecast is broadly in line with previous projections.
• The macroeconomic outlook continues to be characterized by significant uncertainties within the context of the ongoing COVID-19 pandemic. With inflation contained within the target range, the BOJ has remained accommodative in its monetary policy stance with the aim of supporting recovery in economic activity.

(Source: BOJ)

• The pace of Venezuela’s economic contraction will slow in 2021, as oil exports rise moderately and the government expands opportunities for the private sector in some sectors, though activity will remain a fraction of pre-2014 levels.
• Fitch Solutions forecasts Venezuela’s economy will contract 2.9% y-o-y in 2021, from a 26.6% contraction in 2020, with growth reaching positive territory in 2022.
• In the long term, it expects US sanctions will remain in place. Combined with the Venezuelan economy’s myriad other structural weaknesses, there is limited upside for economic activity moving forward.

(Source: Fitch Solutions)

• A slow economic recovery from the pandemic and limited government support for household incomes will drive elevated risks of social unrest in Guatemala in the quarters ahead.
• Fitch Solutions sees the potential for additional risks to social stability stemming from the rollout of COVID-19 vaccines as delays in distribution could slow the economic recovery or allow for another spike in cases.
• As a result, the agency maintained Guatemala’s score of 40.0 out of 100 in the social stability’ subcomponent of its Short-Term Political Risk Index.

(Source: Fitch Solutions)

• Federal Reserve policymakers believe it will likely "take some time" until the economy generates substantial growth that would allow the central bank to consider tightening monetary policy, according to the minutes of the central bank's last policy meeting released Wednesday.
• At the conclusion of its previous meeting on Jan. 27, the Federal Open Market Committee, the Fed's rate-setting arm, kept its benchmark rate in a range of 0% to 0.25% and bond purchases at a $120Bn monthly pace.
• "The Committee's guidance for asset purchases indicated that asset purchases would continue at least at the current pace until substantial further progress toward its employment and inflation goals had been achieved," the Fed said in the minutes.
• The Fed's willingness to persist with the status quo of a lower-for-longer interest rate environment comes as the 10-2 Year Treasury yield spread curve, a gauge of the health of the economy, has widened to levels not seen since April 2017, on expectations for a speedier recovery and a pickup in inflation.

(Source: Yahoo Finance)