Bank of Jamaica Keeps 5.50% Rate as Hurricane Melissa and Oil Costs Pressure Inflation

The Bank of Jamaica’s Monetary Policy Committee agreed without dissent at its May 2026 sitting to keep the central bank’s policy rate at 5.50 per cent. At the same time, the BOJ signalled that inflation is expected in the next few quarters to rise above the top of its 4.0 to 6.0 per cent target band.

Governor Richard Byles, delivering his final report to Parliament’s Standing Finance Committee on June 10, pointed to two major blows facing the economy. He referenced Hurricane Melissa, which hit about seven months earlier, along with conflict in the Middle East that has pushed crude oil prices 59.4 per cent higher since March 2026.

Melissa has left a deep mark on output. Real gross domestic product fell by 7.1 per cent in the December 2025 quarter, after expanding by 5.1 per cent in the previous quarter. The downturn affected mining, tourism, agriculture and manufacturing.

For the March 2026 quarter, the economy is estimated to have shrunk at a more moderate pace of 4.0 to 6.0 per cent. The BOJ also expects hurricane rebuilding activity and dearer fuel imports to move the current account from a surplus of 3.0 per cent of GDP in FY2024/25 to roughly balance in FY2025/26.

Even with those pressures, Jamaica’s external buffers remain strong. Gross international reserves were about US$6.5 billion in late May, equal to 138.5 per cent of the adequacy benchmark. The Jamaican dollar also gained 1.5 per cent year over year to J$157.90 against the US dollar, helped by the Bank’s direct action in the foreign exchange market.

The central bank projects GDP growth of 1.0 to 3.0 per cent for both FY2026/27 and FY2027/28. However, it said inflation risks are still tilted upward, with much depending on how long the Middle East conflict continues.