Speaking at the Bank’s quarterly press conference held on Tuesday, Bank of Jamaica (BOJ) Governor, Brian Wynter, said “Foreign reserves are adequate and we have a sustainable position in the current account of the balance of payments. Fiscal performance is strong and Jamaica is shedding its burdensome debt load at an admirable rate. Inflation is low, stable and predictable.”
He noted, however, that the economy “continues to operate below its potential,” pointing to spare capacity “that can be used for the production of goods and services, but is not being used”.
Mr. Wynter said consequent on this, the BOJ believes there is room to accommodate more growth, “without compromising our ability to meet the inflation target”.
Against this background, he said the Central Bank will maintain an accommodative monetary stance to support a faster return of inflation to the centre of the four to six per cent target in the period after March 2020.
Wynter pointed out that credit extended to private-sector businesses and households by commercial banks, merchant banks and building societies has increased by 15.2 per cent over the 12-month period ending March 2019.
Governor Brian Wynter says this is 1.4 per cent higher than the 13.8 per cent out-turn for the corresponding period last year.
Mr. Wynter pointed out that the pace of accelerated credit expansion is consistent with current and previous BOJ policy decisions.
While acknowledging that the growth in private-sector credit, particularly over the last three months, “is very encouraging”, Mr. Wynter contended that “it is still not fast enough”.
“Based on our (BOJ) estimates of the capacity of the economy, faster growth is possible without causing inflation to rise above the [four to six per cent] target,” the Governor said.
Meanwhile, Mr. Wynter advised that the BOJ’s announcement last week of a reduction in the deposit-taking institutions cash reserve requirement by two percentage points, to seven per cent effective June 3, will add another $12.3 billion to the financial system.
The Governor noted that the reduction, the second for 2019 following a three per cent lowering of the reserve requirement in March, will support the provision of more credit to businesses and households “at lower rates and on better terms”.
Mr. Wynter pointed out that the cash reserve reductions are possible because of macroeconomic stability in Jamaica.
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