Macroeconomic Forecast Jamaica

September 2008 | Macroeconomic Forecasts

The Jamaican dollar will remain under pressure in the short term as investors seek protection against rampant inflation in the form of US dollar assets, although the Bank of Jamaica (BOJ) will continue to intervene to maintain stability. After successive interest rate hikes this year, the benchmark 180-day repo rate currently stands at 14.2%, 1200 basis points below inflation. While further hikes would be warranted given inflationary risks, we believe that the BOJ will be too concerned with the current poor performance of the economy to tighten monetary policy. With the unit currently trading at JMD71.55/US$, we are sticking with our end-2008 exchange rate forecast of JMD73.70/US$.

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