Durrant Pate/Contributor

Liquidity in Jamaica’s money market suffered a modest decline last week as measured by the aggregated current balances held by deposit-taking institutions (DTIs). 

As at May 22, the total aggregate current balance amounted to J$75.19 billion, marking a 27.2 per cent increase compared to the previous week. Demand for money market instruments remained robust, as reflected in the oversubscription of the Bank of Jamaica’s (BOJ) weekly 30-day Certificate of Deposit (CD) auction. 

The average yield declined to 5.67 per cent, down from 5.77 per cent the previous week. Total bids reached J$31.78 billion against an offer of J$18.00 billion, resulting in a bid-to-cover ratio of 1.8x, down from 2.2x last week. 

This decline was due to a 20.0 per cent increase in the offer size and a 5.3 per cent decline in total bids. The next auction is scheduled for today (May 28). 

Last week, the Bank of Jamaica (BOJ) reduced its policy rate by 25 basis points to 5.75 per cent, marking the first rate adjustment since its decision to hold the benchmark rate at 6.00 per cent at its meetings in February and March 2025. 

The BOJ’s assessment of an improving macroeconomic environment, underpinned by a more favourable inflation trajectory and expectations of gradual economic recovery, informed its decision to reduce the rate. 

If this develops into a trend, it is likely to result in a continued decline in money market rates, an increase in liquidity, and a corresponding shift in investor preference toward longer-dated instruments as they seek to optimise returns.