Langrin raises policy rate 50 basis points to 6.0 percent

The Bank of Jamaica increased the policy rate by 50 basis points to 6.0 percent, reversing an August pause at 5.50 percent.

Headline inflation climbed to 7.9 percent in August from 7.5 percent in July and 1.2 percent a year earlier, exceeding the upper bound of the target range for three consecutive months.

Core inflation remained at 5.2 percent.

Bank Governor Brian Langrin stated that “temporary supply shocks have persisted and begun to generate second-round effects,” compelling an immediate monetary response.

Inflation was pushed up by drought-induced agricultural losses and higher commodity pass-through to fuel costs.

The central bank projects inflation will return to target by mid-2027.

Post-hurricane reconstruction following Hurricane Melissa and El Niño crop damage have compounded global pressures.

Langrin pointed to geopolitical conflicts in the Middle East and Ukraine, which elevated global shipping and commodity prices alongside tighter international financing conditions.

The US Federal Reserve raised its target range by 25 basis points to 3.75-4.0 percent in September 2026.

Meanwhile, domestic 12-month business inflation expectations reached 7.3 percent in July.

Foreign exchange reserves of $6.6 billion provide a buffer.