The Bank of Jamaica (BOJ) maintains its policy interest rate at 5.75 per cent, citing continued uncertainty regarding global trade policy and recent geopolitical developments that could stimulate global inflationary pressures. 

The central bank’s Monetary Policy Committee (MPC) determined that holding the interest rate is the appropriate decision to ensure inflation remains within the target range over the next two years. During its meetings on June 25 and 26, the committee unanimously agreed that, in addition to keeping the policy rate unchanged, it will continue to employ measures to preserve relative stability in the foreign exchange market.

“While the risks to the inflation forecast are skewed to the upside (which means that inflation could be higher than projected), the bank expects inflation to remain within its target range of 4.0 to 6.0 per cent over the next eight quarters. The private sector’s expectations of the level of inflation in the future, a key driver of headline inflation, have stabilised,” the MPC said, highlighting local conditions.

In the BOJ’s May 2025 survey of businesses’ inflation expectations, respondents’ expectations for inflation 12 months ahead were stable at 7.2 per cent, relative to the previous surveys. Additionally, the central bank said the domestic fiscal policy stance continues to pose no risk to inflation in the near term.

While the central bank took into account the downward trend of international commodities prices such as grains, liquefied natural gas and oil, it remained concerned about the impact of ongoing and developing geopolitical tensions that could stoke imported inflation.

“However, geopolitical tensions, if prolonged or intensified, could cause upward pressures on international commodity prices. In addition, while the direct impact on domestic inflation of recent changes in global trade policy is expected to be moderate, the second-round impact of these policies could be higher than anticipated,” the committee further rationalised,” the MPC’s report explained.

Since September 2024, inflation has remained stable within the Bank’s target range of 4.0 to 6.0 per cent since. According to data from the Statistical Institute of Jamaica (STATIN), annual headline inflation as of May 2025 was 5.2 per cent, in line with the outturn at May 2024. Core inflation, which excludes the prices of agricultural food products and fuel from the consumer price index (CPI), was 4.6 per cent in that same month, remaining below the upper limit of the target since July 2023.

The MPC’s decision also took into account inflation in the United States and that country’s Federal Reserve keeping policy interest rates between 4.25 and 4.50 per cent.

“The MPC reaffirms its commitment to maintaining low and stable inflation and will deploy the tools necessary to preserve stability. To this end, the committee will continue to monitor the incoming data and adjust its policy accordingly,” the BOJ decision read.