The central bank of Jamaica trimmed its key policy interest rate by 25 bps to 0.50 percent at its August meeting. It is the fourth rate cut so far this year bringing borrowing cost to a record low. Policymakers said that the decision aims to stimulate a faster expansion in private sector credit, which should lead to higher economic activity, consistent with the inflation target of 4 percent to 6 percent. The Committee added that the inflation is expected to average 4.3 percent over the next eight quarters within the target range, but in the absence of a policy response, inflation is projected to fall below the lower limit of the target at various points over this period. Over the medium term, inflation outlook will gradually approach the midpoint of the Bank’s target, albeit at a slower pace than previously expected, amid low domestic demand conditions relative to the economy’s capacity, softer growth among Jamaica’s main trading partners and declines in international commodity prices. Interest Rate in Jamaica averaged 11.90 percent from 1996 until 2019, reaching an all time high of 33 percent in October of 1996 and a record low of 0.75 percent in May of 2019.
Interest Rate in Jamaica is expected to be 0.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Jamaica to stand at 0.75 in 12 months time. In the long-term, the Jamaica Interest Rate is projected to trend around 1.50 percent in 2020, according to our econometric models.