Gov’t might have to adjust interest rates – Analyst

Debbie-Ann Wright, News Editor
The Gleaner/Power 106 News Centre

Financial analyst, Dennis Chung says the government might have to make an upward adjustment to the benchmark interest rates, to compensate for the increase in inflation projected by the Bank of Jamaica.

Yesterday, the BOJ announced it has revised its forecast for inflation for this fiscal year as a result of the impact of the recent tax measures announced by the government.

The Central Bank is forecasting a surge in inflation for the current June quarter, which is expected to further bump up costs and revert the country to double-digit price increases.

Chung said while it was expected that inflation would increase as a result of the measures, the government might consider adjusting the interest rate to minimize the effects.

BOJ Governor Brian Wynter said inflation for the June quarter is now projected to be in the range of 3.0 to 5.0 per cent, double the 1.5 to 2.5 per cent initially forecasted.

Inflation for the fiscal year is projected to increase to a range of 10 to 12 per cent compared with the bank’s earlier projection of 6 to 8 per cent.

The last time Jamaica experienced double-digit inflation was in 2010, when it came in at 11.7 per cent.

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