richard byles : jamaica's experience with the transmission mechanism during the tightening cycle following the inflation shock presentation by mr richard byles, governor of the bank of jamaica, to the panel discussion by central bank presidents during the inter - american development bank's 59th meeting of the network of central banks and finance ministries, washington dc, 17 april 2024. * * * overview my brief remarks will be focussed on jamaica's experience with the transmission mechanism during the tightening cycle following the inflation shock. in this regard, i will be spending a moment discussing the challenges with the credit channel and the relative dominance of the exchange rate channel. this will provide insights on the bank of jamaica's policy response which continues to be geared at ensuring price and financial system stability. i will close by highlighting the actions the bank is undertaking to improve the weak transmission mechanism. to address rising inflation and heightened inflation expectations associated with the pandemic, bank of jamaica started tightening monetary policy in october 2021 ( before most advanced economies ). the bank employed a three - pronged approach : i. gradually increasing the policy interest rate by 650 basis points ( bps ) since october 2021, from 0. 5 % to its current level of 7. 0 % ; ii. deploying open market operations more aggressively to maintain tight jamaica dollar liquidity conditions ; ( this also involved increases to the domestic and the foreign currency cash reserve requirements applicable to deposit - taking institutions ( dtis ) and a widening of the interest rate corridor ) ; and iii. engendering greater stability in the foreign exchange market through foreign exchange intervention and adjustments to the net open position limits. in jamaica, we have found that the credit channel, which is the main channel targeted by the bank's monetary policy actions, has been quite weak. as such, we have observed that our policy actions geared at managing inflation expectations and the exchange rate channel have generally been more effective. as a small open economy, that is dependent on imports with approximately 50 % of consumption being imported, one can understand the imported inflation challenges for jamaica in recent years, arising from the global macroeconomic environment. since october 2021, while maintaining a flexible exchange rate, the bank has therefore taken decisive actions in the foreign exchange market, primarily selling foreign exchange when necessary. without these actions, imported inflation, and hence the final prices faced by consumers would have been higher. 1 / 2 bis - central bankers'speeches a major issue during the tightening cycle was the weakness in the monetary transmission

useless and knowledge without integrity is dangerous and dreadful. " in closing, my own hardworking staff would have enough integrity to chastise me if i didn't point out that bank of jamaica, in recognition of the need to create opportunities for young entrants to the labour market, established the graduates opportunity for learning and development ( gold ) programme in 2016. it met an urgent need of creating a pool of candidates who have been exposed to the fundamentals of central banking practice. this is a critical step towards expediting the process of selection and recruitment and improving the efficiency of the bank's on - boarding process. participants in the gold programme are provided with specific training opportunities that are designed to ensure the integration of technical and non - technical knowledge, skills and abilities in the performance of the various functions within the departments of the bank. so far, the bank's staff complement has increased through the recruitment of 80 new employees who successfully completed the 2016 and 2017 gold programmes. hopefully, we will soon be seeing some of you. i have reflected on the four - way test used by rotary that asks : is it the truth? is it fair to all concerned? will it build goodwill and better friendships? will it be beneficial to all concerned? as you consider your future and wonder how you will climb the ladder in a competitive market, perhaps you can also bear in mind these questions : is what i do in demand? am i good at it and do i love it? how can i enhance and advertise my skills? " always remember, ladies and gentlemen, that you were born to win but, in order to be a winner, you must plan to win and prepare to win before you can expect to win. thank you. 3 / 3 bis - central bankers'speeches