The Bank of Jamaica (BOJ) has lowered the policy interest rate – the rate offered on overnight deposits with the central bank – by 25 basis points to 2.50 per cent.
The policy stance reflects the bank's assessment of inflation for the next four quarters and beyond.
Its assessment is that inflation over the next three quarters will fall slightly below the lower end of its target of 4.0 per cent to 6.0 per cent, before increasing towards the centre of the target in the following quarter.
The projected trajectory for inflation over the next four quarters primarily reflects the impact of the large fall in agricultural food prices, and consequently the consumer price index, in the March 2018 quarter.
Inflation over the period will also be affected by increases in crude oil prices.
The medium term outlook for inflation, however, continues to reflect a sluggish recovery in the real economy, even as projections show a modest acceleration in economic growth.
Domestic demand is also expected to remain restrained by continued fiscal consolidation.