More rate hikes possible, economist warns after BOJ move

ECONOMIST Keenan Falconer expects the Bank of Jamaica (BOJ) could raise interest rates again if inflation remains high, describing Monday’s half-point increase as more aggressive than he had anticipated.

“I think the BOJ’s decision to raise rates was inevitable, albeit more aggressive than I initially anticipated. Given the extent of acceleration in inflation over the last two months, I’m not surprised it has taken this proactive stance,” Falconer told the Jamaica Observer.

The BOJ raised its policy rate from 5.5 per cent to 6.0 per cent, effective Tuesday. It is the bank’s first rate increase since November 2022 when it raised the rate to 7.0 per cent at the end of an earlier campaign to contain inflation. Rates were subsequently reduced, most recently in February this year, before the BOJ held them steady through August.