Exchange of Letters between Governor & Finance Minister on the Missed Inflation Target

  • Annual inflation of 3.2%, 3.1% and 2.8% in April, May and June 2018, respectively, was below Bank of Jamaica's inflation target of 4.0% to 6.0% .
  • This target was set for the medium term, from April 2018 onwards, by the Minister of Finance and the Public Service in September 2017.
  • In accordance with the increased accountability required of the central bank, the Governor has provided the Minister with an explanation of the breach, the Bank's expectation of the future path for inflation and prospective policy actions to ensure that inflation returns to the target.
  • The Minister has authorized Bank of Jamaica to publish the exchange of letters between the Governor of the Bank of Jamaica and the Minister of Finance and the Public Service on the missed inflation target.

The correspondence and the report are provided at the links below.

Published: August 2018


Also See:

Monetary Policy Objective
Setting the Inflation Target
Monetary Policy Decision Making
Monetary Policy Schedule

An operating target of policy, e.g. the monetary base and interest rates, is influenced directly by the Bank and can also be varied in order to bring about the desired impact on the policy objective.

An intermediate target of policy, e.g. the money supply or the exchange rate, has three main characteristics:

  1. It is not directly determined by the Bank of Jamaica
  2. It responds, however, to a stimulus that the Bank can vary, and
  3. It's behaviour is expected to be closely related to the ultimate target - Inflation

Money market trading between the Bank of Jamaica and authorized dealers, with the intention of influencing money and credit in the financial system. OMO involves outright sale or purchase of Government of Jamaica (GOJ) securities held by the Bank, and /or repurchase and reverse repurchase transactions.

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