- FILE
Bank of Jamaica building in downtown Kingston.
THE BANK of Jamaica has reduced interest rates effective yesterday - the first time for 2005 that rates have been lowered. The last adjustment was effective December 28, 2004.
Based on the behaviour of the central bank last year - rates were cut eleven times - the financial community is expecting this to be the first of many rate cuts.
On 30-day instruments, interest rates have dropped from 13.80 per cent to 13.50 per cent. On the other end of the spectrum, for 365-day instruments, the rates have dropped from 15.50 per cent to 15.0 per cent
Pan Caribbean Financial Services analysed the rate reduction as something investors were expecting.
It states that with January's Treasury Bill (T-Bill) at an average rate of 14.40 percent or fifty-four basis points lower than the previous T-Bill, the rate cut this morning comes as no surprise.
Pan Caribbean states that further interest rate cuts are anticipated because of positive indicators. They cite:
The onset of a bumper tourist season with strong U.S.-dollar flows. A healthy net international reserve. Confirmed foreign direct investment flows in 2005.The balance of payments continues to improve.The stability of the Jamaican dollar against the United States dollar.
