brian wynter : improving credit conditions and the role of credit bureaus speech by mr brian wynter, governor of the bank of jamaica, at the jamaica employers federation ’ s ceo breakfast, kingston, 16 november 2010. * * * ladies and gentlemen, thank you for inviting me to speak at one of the jamaica employers federation ’ s ceo breakfast. as is well known but perhaps not sufficiently emphasised, the jamaican economy is in the middle of implementing a comprehensive set of policy reforms. as the transformation unfolds, economic agents will be called on to make changes in the way we do business. accordingly, this morning i want to speak to you on an initiative that has gained increasing importance in the world at large and on which jamaica is about to embark. specifically, i would like to share with you some thoughts on how to improve credit conditions and the role of credit bureaus in doing so. in recent months there have been loud cries for commercial banks to lower their lending rates. these calls have come against the background of the central bank lowering its 30 - day signal rate fairly sharply over the past nine months ( most recently by half a percentage point to 7. 50 % last week friday ). also, there have been steady and substantial declines in the market - determined yields on government instruments. successful completion of the jamaica debt exchange heralded an era of low interest rates for the jamaican economy and interest rates in the money market are currently at the lowest they have been in over two decades. not surprisingly, while economic agents are willing to accept these lower rates on their financial investments, they would also like to access loan funds at lower costs. the bank of jamaica would also like to see a reduction in lending rates but as the supervisor of deposit - taking institutions, we have a responsibility to ensure that the institutions we supervise operate their businesses in such a way that the stability of the financial system is not compromised. it is in this vein that i will speak to you this morning on one initiative that will improve the efficiency of the market for credit while at the same time lowering costs to borrowers. the subject of my remarks today was also motivated by the recent release of the report “ doing business 2011 : making a difference for entrepreneurs ” by the world bank and the international finance corporation. in the report, jamaica was ranked 81st out of 183 countries that were surveyed. at a more granular level, we were ranked 89th in the area of “ getting credit ” and this ranking was in part

the ppv fare increase, which is scheduled to take effect in april 2024. without the impact of this 1 / 3 bis - central bankers'speeches second increase in ppv fares, inflation at december 2024 would fall within the target range. whilst some key drivers of headline inflation, such as inflation expectations and the exchange rate, have remained generally stable and grains prices have declined and are projected to continue to fall, the risks to the inflation outlook remain elevated. on the upside, higher than projected second - round effects from the ppv fare increases, higher wage adjustments in the context of a tight labour market and a further deterioration in supply chain conditions could influence higher inflation. in particular, while shipping prices and oil prices have remained below their peak, they have recently risen amid ongoing geopolitical tensions and supply chain disruptions. the factors that could lead to lower - than - projected inflation include weaker - than - projected global growth, which could reduce domestic demand and imported inflation, resulting in lower rates of price change. in the context of the inflation outturn and outlook, the mpc decided to maintain : ( i ) the policy interest rate ( the rate offered to deposit - taking institutions ( dtis ) on overnight placements with bank of jamaica ) at 7. 0 per cent ; and ( ii ) relative stability in the foreign exchange market. the mpc, however, decided to tighten jamaica dollar liquidity conditions more aggressively. the committee also decided to maintain heightened surveillance of these risks to the inflation outlook and will base its future monetary policy decisions on the incoming data related to the strength of the potential risks to inflation noted above. let me now look at the foreign exchange market. foreign exchange market the foreign exchange market has remained relatively stable, reflecting continued strong tourism and remittance flows as well as the effect of the actions taken by the bank. to prevent undue volatility in the foreign exchange market, boj has sold approximately us $ 907 million via its b - fxitt facility over the 12 months to end - january 2024. when these sales are set against boj purchases, however, the result is that the bank net purchased approximately us $ 1. 3 billion over the period. in the context of the stability in the exchange rate, the general downward trend in dollarization has continued, with individuals and businesses reflecting an increased preference to hold jamaican dollars. update and outlook for the jamaican economy i will now give a brief update on the jamaican economy. real gdp, which