Download Press Briefing Speech - Governor Brian Wynter. Download Quarterly Monetary Policy Report July to September 2017.

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1 Download Quarterly Monetary Policy Report July to September 2017 Download Press Briefing Speech - Governor Brian Wynter QUARTERLY MONETARY POLICY PRESS BRIEFING

2 Jamaica s foreign exchange market has entered into a new era. One way movement More balanced two-way market QUARTERLY MONETARY POLICY PRESS BRIEFING 2

3 Jamaica s foreign exchange market has displayed more two-way movement Since start of appreciations 98 depreciations up to 23 Nov 2017 QUARTERLY MONETARY POLICY PRESS BRIEFING 3

4 we have also seen more cyclical movements in JMD/USD Exchange Rate QUARTERLY MONETARY POLICY PRESS BRIEFING 4

5 we have also seen more cyclical movements in JMD/USD Exchange Rate QUARTERLY MONETARY POLICY PRESS BRIEFING 5

6 These changes in market behaviour are occurring in the context of a currency that is fairly valued. QUARTERLY MONETARY POLICY PRESS BRIEFING 6

7 Current Account adjusted for FDI related Imports (per cent of GDP), surplus for past 2 years (CAB+FDI)/GDP QUARTERLY MONETARY POLICY PRESS BRIEFING 7

8 QUARTERLY MONETARY POLICY PRESS BRIEFING 8

9 Reduces BOJ s footprint in the FX market Improves FX market info and price discovery Reassures market of availability of supply of FX Improves the efficiency and transparency of the FX market. Enhances the effectiveness of monetary policy 9

10 New era of two-way movements allowing Jamaica to move towards inflation targeting. QUARTERLY MONETARY POLICY PRESS BRIEFING 10

11 4.0% 6.0% Medium-term Inflation Target Set by Minister of Finance QUARTERLY MONETARY POLICY PRESS BRIEFING 11

12 Continuous medium-term inflation target range of per cent Inflation (Actual & Forecast) Target Range QUARTERLY MONETARY POLICY PRESS BRIEFING 12

13 Continuous medium-term inflation target range of per cent Inflation (Actual & Forecast) Target Range QUARTERLY MONETARY POLICY PRESS BRIEFING 13

14 Private sector inflation expectations anchored in the target range. QUARTERLY MONETARY POLICY PRESS BRIEFING 14

15 The policy interest rate will be increased if 6.0 Economy Interest Rate QUARTERLY MONETARY POLICY PRESS BRIEFING 15

16 Economy The policy interest rate will be reduced if 6.0 Interest Rate QUARTERLY MONETARY POLICY PRESS BRIEFING 16

17 Policy Rate reduced to 3.25% Announced: 23 November 2017 QUARTERLY MONETARY POLICY PRESS BRIEFING 17

18 Strengthening the transmission of the policy interest rate to market interest rates. New Policy Interest Rate 30-day Certificate of Deposit Rate Overnight Deposit Rate Effective Since: 01 July 2017 QUARTERLY MONETARY POLICY PRESS BRIEFING 18

19 Jamaica s unemployment rate declined to 11.3 per cent at July Unemployment Rate (%) Q Q Q Q Q Q Q Q Q QUARTERLY MONETARY POLICY PRESS BRIEFING 19

20 A foundation for growth Low Inflation Macroeconomic Expanding Credit Falling Interest Rates stability entrenched Lower Fiscal Deficits Lower Current Account Deficits Competitive Exchange Rate Greater Financial Inclusion Increasing Non-Borrowed Reserves More Effective Financial System Surveillance and Monetary Policy Actions QUARTERLY MONETARY POLICY PRESS BRIEFING Strong, Broad-based Ownership, Oversight of Structural Reforms and Growth Plan 20

21 A foundation for growth Low Inflation Continuation of accommodative policy stance Lower Fiscal Deficits Greater Financial Inclusion Expanding Credit Lower Current Account Deficits Falling Interest Rates Competitive Exchange Rate Increasing Non-Borrowed Reserves More Effective Financial System Surveillance and Monetary Policy Actions QUARTERLY MONETARY POLICY PRESS BRIEFING Strong, Broad-based Ownership, Oversight of Structural Reforms and Growth Plan 21

22 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar Bank focused on maintaining low inflation Period of favourable oil shock faded over time and ended about June Inflation (Actual & Forecast) Target Range Top 17 Trading Partners QUARTERLY MONETARY POLICY PRESS BRIEFING

23 GO TO REPORT Inflation Annual inflation was 4.6 per cent at September 2017, within the target range for FY2017/18 of 4.0 per cent to 6.0 per cent. This outturn represented an uptick, relative to the 4.4 per cent inflation rate recorded at June 2017, which reflected increases in all the divisions of the CPI READ MORE >. International Economy Global economic growth for the September 2017 quarter is estimated to have accelerated relative to the previous forecast but remained unchanged relative to the June 2017 quarter. This acceleration was underpinned by stronger expansion in a number of economies, offset by weaker growth in the UK. The slowdown in economic activity in READ MORE >. Jamaican Economy Following a marginal decline in the June 2017 quarter, the Jamaican economy is estimated to have grown within the range of 0.5 per cent to 1.5 per cent for the September 2017 quarter. This, however, represented a deceleration relative to the growth in the corresponding quarter of READ MORE > July to September 2017 Quarter Foreign Exchange Market The weighted average selling rate of the Jamaica Dollar visá-vis the US dollar closed the September 2017 quarter at J$ = US$ This reflected depreciation of 1.0 per cent relative to the previous quarter and 1.3 per cent relative to the... READ MORE >. Fiscal Developments Central Government operations recorded a fiscal deficit of 0.4 per cent of GDP for the September 2017 quarter, 0.5 percentage points lower than the budgeted deficit. The outturn reflected greater than anticipated Revenue & Grants as well as lower than budgeted Expenditure READ MORE >. Implications for Monetary Policy The Bank forecasts that inflation will remain relatively stable over the next four quarters, despite the lagged effects of agriculture supply shocks and improved demand conditions. For FY2017/18, inflation is projected to remain within the Bank s target range of 4.0 per cent to 6.0 per cent... READ MORE >.

24 MORE INFORMATION Special Features Inflation Expectations Survey Credit Conditions Survey Jamaica s Macroeconomic Programme under the new Stand-By Arrangement Economic Data and Publications National Summary Data Page (NSDP) Advance Release Calendar Statistical Digest Jamaica in Figures For queries, publications@boj.org.jm. Copyright Bank of Jamaica All rights reserved.