brian wynter : quarterly monetary policy report – latest economic developments in jamaica remarks by mr brian wynter, governor of the bank of jamaica, at the press briefing for the june 2013 quarterly monetary policy report, kingston, 21 august 2013. * * * good morning ladies and gentlemen : in presenting today ’ s release of the quarterly monetary policy report for the june 2013 quarter i will take the opportunity to share with you the outturn for the quantitative performance criteria which were agreed under the programme with the international monetary fund ( imf ). i will then highlight the bank ’ s policy actions over the review quarter and some of the main economic developments which had an impact on these decisions. i will also share the bank ’ s perspective on the near term outlook for some of the main economic variables. also, this quarter ’ s report includes two special articles : the evolution of jamaica dollar liquidity and its impact on money market interest rates – january to june 2013 and recent developments in remittance inflows, both of which should be of interest. performance under the imf extended fund facility ( eff ) – june 2013 quarter the monetary targets under the eff for end - june 2013 were comfortably met. in particular, the net international reserves ( nir ) amounted to us $ 1003. 2 million relative to the target of us $ 873. 9 million. the target for net domestic assets ( nda ) was also met. information from the ministry of finance indicates that we also met the fiscal and debt targets. in addition, the structural benchmarks due to be achieved during the period were met. against this background, a team from the imf is presently in jamaica conducting the first review of the country ’ s performance under the extended fund facility ( eff ). their review will inform consideration by the imf executive board in september. approval of the review by the executive board will facilitate the next drawdown from the imf. this will also serve to provide reassurance to other multilateral partners and the financial markets about the government ’ s commitment to the reforms that are necessary to improve the country ’ s competitiveness and growth. economic developments in the june 2013 quarter monetary and foreign exchange policy turning to economic developments during the june 2013 quarter, the bank maintained its monetary policy rate at 5. 75 per cent during the june quarter. the monetary policy rate is the interest rate paid by the bank on 30 - day certificates of deposit ( cds ). this policy stance reflected the context

cent, exhibited this muting effect. despite the significantly lower than expected outturn of inflation for the first four months of the fiscal year, the bank is maintaining the fy2013 / 14 forecast for inflation to be in the range of 8. 5 per cent to 10. 5 per cent. domestic prices are expected to reflect the impact of higher international commodity prices, particularly crude oil, and the pass - through of the depreciation in the exchange rate. additionally, seasonal increases in the prices of domestic agricultural produce are expected to contribute to inflation for the period. however, although the muting effect may well continue, a cautious assessment of the near term risks suggests that inflation may also end up close to the upper bound of the forecast range for the quarter and the fiscal year. these risks largely relate to the administrative adjustments to transportation costs ( which were recently announced ) and, possibly, adjustments to utility costs as well as higher than expected crude oil prices. adverse weather, in the context of a forecast for an above average hurricane season, also remains an upside risk to the forecast. the existence of weaker than anticipated domestic demand conditions continues to be the main downside risk. real gdp growth real gdp is estimated to have contracted in the june quarter, albeit at a slower rate than in the previous quarter. both the tradable and non - tradable sectors are estimated to have declined in the quarter. the contraction reflected the impact of drought conditions, continued weak domestic demand as well as the slow recovery in the global economy which contributed to lower remittance inflows and low demand for jamaica ’ s goods and services. agriculture, forestry & fishing ; hotels & restaurants and electricity & water supplies were estimated to be the main industries which recorded declines. looking ahead, the bank is projecting that real sector activities will improve in the remaining quarters of the fiscal year. this forecast largely reflects an expected recovery relative to the outturn for the corresponding period of fy2012 / 13 when the performance of the economy was negatively affected by hurricane sandy which was followed by drought conditions and a high level of investor uncertainty related to perceived delays in concluding an agreement with the imf. therefore, the projection for real gdp growth is predicated on improved investor confidence, continued expansion in the global economy and more robust growth in credit to the private sector given the release of resources as a result of reduction in demand from the public sector. against this background, real gdp growth for the september quarter as well as fy20