Jamaica Cuts Policy Rate

The Bank of Jamaica has cut the monetary policy rate by 50bp to 9.0%, citing lower-than-expected may inflation and the recent strength of the JAD. The central bank had already cut the rate by 50bp to 9.5% on June 3. It says that the deceleration in May inflation to 0.6% month over month from 1.3% in April reinforces the likelihood that inflation will trend toward the lower bound of its target range of 7.5%-9.5% at the end of FY10/11, which ends March 31 2011. However, JPMorgan says annual inflation is still high at 14.0%, up from 10.2% in December, which could limit the bank’s ability to make further cuts.