JMEA, PSOJ, and JCC ask banks and BOJ to bow lower

 



In a press release issued today, December 20, the Jamaica Manufacturers and Exporters Association (JMEA), the Private Sector Organisation of Jamaica (PSOJ), and the Jamaica Chamber of Commerce (JCC) are all asking banks to reduce rates to align with rate cuts made by the central bank.

They are also asking the central bank itself to consider future rate cuts in order to further encourage growth.

“Commercial banks must immediately align with the BOJ’s policy direction by lowering lending rates and expanding access to credit, especially for MSMEs—the backbone of our economy. Affordable credit is critical to driving productivity, innovation, and job creation,” the statement signed by Sydney Twaites, President Jamaica Manufacturers and Exporters Association, Metry Seaga, President, Private Sector Organization of Jamaica and Phillip Ramson, President, Jamaica Chamber of Commerce said.

They stated, “We applaud the Bank of Jamaica (BOJ) for its effective economic management, including the recent reduction in the policy interest rate to 6.25 per cent and the maintenance of a stable exchange rate.

“We, however, emphasize the urgent need for commercial banks to expedite the transmission of these rate cuts to borrowers and further monetary easing by the BOJ to stimulate economic growth.”

In background, the business leaders noted that more was needed to support economic growth.

“The All-Jamaica Consumer Price Index (CPI) for November 2024, released by the Statistical Institute of Jamaica (STATIN), reflects an inflation rate of 1.0 per cent for the month, influenced mainly by a 2.1 per cent rise in the ‘Food and Non-Alcoholic Beverages’ category, driven by higher prices for agricultural produce following Tropical Storm Rafael.

“The point-to-point inflation rate (November 2023–November 2024) was 4.3 per cent, comfortably within the BOJ’s target range of 4.0 per cent –6.0 per cent. Calendar year-to-date inflation as of November 2024 was 3.8 per cent. These trends affirm a stabilizing inflation environment, which provides room for further monetary easing to support economic recovery and growth.”

The sector heads stated that despite inflation stability, Jamaica’s economy faces significant challenges.

“STATIN data shows that the Goods Producing Industries grew modestly by 1.5 per cent in Q2 2024, driven by agriculture, forestry, and manufacturing. However, sectors like construction are underperforming, highlighting the urgent need for accessible and affordable credit to facilitate recovery and expansion. The BOJ has successfully preserved exchange rate stability despite external uncertainties, including geopolitical tensions and natural disasters. This stability creates a solid foundation for businesses to plan and invest with confidence. Coupled with a favorable inflation outlook and improving business sentiment, the environment is ripe for robust economic activity.”

The JMEA, PSOJ, and JCC said that they are strongly urging the BOJ to continue lowering the policy interest rate to further stimulate the economy.

“While progress has been made, additional reductions are necessary to build business confidence and support critical investments in Jamaica’s productive sectors. We also call on commercial banks to immediately reflect these rate reductions in their lending practices.”

Reduced rates, they stated were essential to ensuring that the benefits of monetary policy are effectively transmitted to businesses and consumers.

“Micro, Small and Medium-sized enterprises (MSMEs), which are pivotal to Jamaica’s economic framework, require affordable financing to boost productivity, drive innovation, and create sustainable jobs.

“ To achieve these objectives, we recommend that the BOJ collaborate with the Bankers’ Association to address inefficiencies in the monetary transmission mechanism. Swift implementation of lending rate adjustments is vital to optimizing the intended impacts of monetary policy changes.”

They concluded, “Jamaica cannot afford to revert to years of chronic poor economic growth. Our GDP per capita remains low compared to regional counterparts that continue to achieve higher growth rates. After making significant sacrifices to repair our macroeconomy—stabilizing inflation, reducing the debt to-GDP ratio, and maintaining a stable exchange rate—Jamaica must now accelerate its growth trajectory. Now is the time for bold action.”

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