BoJ Keeps Key Interest Rate Unchanged

The BoJ kept its policy rate unchanged at 5.50% at its June 2026 meeting, noting that although inflation has remained within its target range over the past three months, the outlook remains uncertain. The central bank said inflation risks from geopolitical tensions have eased but remain elevated, with headline inflation expected to temporarily exceed the upper limit of the target range. It added that keeping policy unchanged is appropriate to contain second-round effects from higher international commodity prices. Headline and core inflation both accelerated, with the former exceeding the Bank's latest projection. While talks to end the Middle East conflict continue, uncertainty remains high. The BoJ also noted that international commodity prices remain elevated and volatile, US financial conditions have tightened, and domestic demand is recovering, though growth risks remain tilted to the downside.

The Bank of Jamaica maintained its policy rate at 5.50% during its May meeting as the inflation outlook remained highly uncertain amid escalating tensions in the Middle East and rising international commodity prices, particularly crude oil. The central bank noted that higher fuel and transport costs are expected to push headline inflation above the 4–6% target range during the June and September 2026 quarters from 4.3% in April. While inflation is expected to gradually moderate as geopolitical tensions ease and global oil supplies normalize, risks remain tilted to the upside due to the possibility of a prolonged conflict, adverse weather conditions, stronger inflation expectations, and higher domestic spending linked to Hurricane Melissa recovery efforts. Meanwhile, economic growth for fiscal year 2026/27 is projected within a 1.0% to 3.0% range, although risks remain skewed to the downside due to the potential impact of the conflict on tourism and domestic activity.

The Bank of Jamaica maintained its policy rate at 5.50% during its March meeting as the inflation outlook became subject to a high degree of uncertainty stemming from the conflict in the Middle East. The central bank noted that while annual inflation remained at 3.9% in February sharp increases in international commodity prices and shipping costs are expected to drive headline and core inflation above the 4–6% target range during 2026. Although the magnitude of these impacts remains uncertain higher energy and transport costs alongside government tax measures pose significant upside risks to the projected path. While the post-hurricane recovery and fiscal spending continue to influence domestic prices the international reserves remain at high levels to provide a strong buffer and ensure market stability. Economic activity is projected to remain within the 1.0 to 3.0% range for the 2026/27 fiscal year despite downside risks to the tourism sector.