JAMAICA | Opposition Supports Call for BOJ to Rollback Deposit Interest Rate Increase

JAMAICA | Opposition Supports Call for BOJ to Rollback Deposit Interest Rate Increase

KINGSTON, Jamaica, October 5, 2021 | The Shadow Minister of Industry, Investment & Global Logistics, Anthony Hylton, MP, is supporting the call by the Jamaica Manufacturers and Exporters Association (JMEA) for the Bank of Jamaica (BOJ) to rescind its decision to increase the deposit interest rate from 0.5% to 1.5%.

Shadow Minister of Industry, Investment & Global Logistics, Anthony Hylton, MP, is supporting a call for the Bank of Jamaica to rescind its decision to increase the deposit interest rate from 0.5% to 1.5%.Shadow Minister of Industry, Investment & Global Logistics, Anthony Hylton, MP, is supporting a call for the Bank of Jamaica to rescind its decision to increase the deposit interest rate from 0.5% to 1.5%.Hylton said that an increase in the deposit interest rate at this time is unreasonable. While BOJ claims that the increase is aimed at ensuring that the annual increase in the prices of consumer goods and services remains within the bank's inflation target of 4% to 6%, Mr. Hytlon is adamant that, “inflation caused by supply chain disruptions is fundamentally different from demand induced inflation, typically managed by macroeconomic fiscal or monetary policy”.

He continued, “With the excess demand, withdrawal of the accommodative policy will eventually result in the inflationary pressures subsiding. While with supply chain disruption, the capability of the economic system to supply goods and services is impaired, and takes time and money to fix, once broken”.

Hylton explained that in the current situation, it may take several years to build shipping capacity, or to expand ports, train truck drivers or build more containers, involving significant expenditure. “Supply chain disruption is not felt equally across all sectors of the economy, and one problem can give rise to other problems so that the shortage of microchips can disrupt the production of automobile or sophisticated medical devices.”

The Shadow Minister reasoned that a broad-based policy designed to fix the demand-induced inflation problem may actually exacerbate the situation for many businesses and vulnerable consumers trying to meet basic needs. “The global pandemic has brought about unprecedented problems in the global supply chain, which cannot be responded to by traditional measures in fighting the resultant supply-induced inflationary pressures, such as this increase” said MP Anthony Hylton.

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