FX.co ★ Jamaica Leaves Interest Rate Unchanged

The Bank of Jamaica decided to maintain its policy interest rate at 5.75% during its December meeting, despite facing increased inflation threats due to the severe economic fallout from Hurricane Melissa. The central bank highlighted that the damage to infrastructure has now been appraised at over 40% of the nation's GDP, and agricultural devastation has resulted in losses amounting to nearly 50% of output. This raises the likelihood of accelerated and prolonged elevations in the prices of food, electricity, and other necessities. These disruptions are likely to cause inflation to surpass the 4-6% target range by early 2026. Additionally, reconstruction activities are anticipated to fuel core inflation through heightened demand and rising costs. The economy is expected to experience a significant downturn in 2025/26, followed by a recovery in 2026/27, aided by external financial support. The central bank has pledged its readiness to modify policy as necessary.