BOJ Predicts Inflation May Reach 11% As Prices Increase

BOJ Predicts Inflation – The Bank of Jamaica (BOJ) says inflation could reach as high as 11% as prices rise in the coming months. The BOJ Governor made the announcement during a media briefing on Monday, February 21 – What may cause inflation to be lower than predicted is weaker global growth and weaker domestic demand from challenges associated with the COVID-19 pandemic.

The Monetary Policy Committee (MPC) gave a bleak outlook in their inflation forecast. They predict that inflation will exceed the Bank of Jamaica’s (BOJ’s) target range of 4 to 6 percent. Projecting instead that inflation may reach between 9 and 11 percent over a 10 to12 month period, depending on factors such as international commodities and shipping prices, energy prices, and agricultural food prices.

Following a meeting last week, the MPC unanimously agreed to raise the interest rate to 4% in an effort to guide inflation back within the target range over the next two years. In responding to concerns raised about the effect of geopolitical tensions between Russia and Ukraine on global oil prices, Deputy Governor of the BOJ, Robert Stennett says the bank is prepared for the worst and that ‘inflation is very sensitive to increasing oil prices as it affects the price of electricity and fuel purchased by motorists’. He says prices are unlikely to stay high as Jamaica uses Liquefied Natural Gas (LNG) rather than crude oil (which is what Russia supplies).

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Reporter: Jhanielle Powell

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