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

expected to be interrupted temporarily, with inflation projected to breach the upper end of the target range towards the end of the june 2024 quarter. this is expected to reflect mainly seasonally higher agricultural food prices, a normalisation in electricity rates following significant declines in the same quarter of 2023, and higher transport - related inflation, due to the uptick in oil prices. thereafter, inflation is projected to return to the target range and generally remain there over the next eight quarters, with the exception of a few months in 2025. the current outlook for inflation is lower than the previous forecast that was shared with you in february 2024. the improved outlook is mainly due to the removal from the forecast of the second increase in public passenger vehicles ( ppv ) fares, which was scheduled for april 2024. this is consequent on the government's recent 2 / 4 bis - central bankers'speeches announcement to postpone the second increase. processed food prices and the cost of meals away from home were also revised downward due to lower international grains prices. this is partly offset by the incorporation in the forecast of the announced increase in the national minimum wage and higher energy and transport - related inflation, due to higher international oil prices. notwithstanding the improved outlook, the mpc considered that the risks around the forecast were skewed to the upside over the next eight quarters. in particular, while core inflation has moderated, it remains close to the upper end of the target range. additionally, both measured and survey - based indicators of businesses'inflation expectations, although lower, have remained above the inflation target. larger - thanprojected regulated price adjustments could also influence higher inflation. there are also some upside risks that are external to jamaica that could influence higher inflation. these include higher - than - projected international oil prices and worsethan - anticipated weather conditions due to the emerging la nina weather phenomenon that could result in a more active 2024 hurricane season. on the flip side, the factors that could result in lower - than - projected inflation include weaker - than - projected global growth, which could reduce domestic demand and imported inflation. the mpc noted that a decision to reduce interest rates will depend on incoming data related to the risks to inflation noted above. in particular, the evolution of wage adjustments, inflation expectations and core inflation are important factors that will guide the mpc's decisions on policy rate adjustments and other monetary policy actions in the future. the bank will maintain heightened surveillance of the risks to inflation.