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Show me your interest and I'll show you mine - BOJ governor tells private sector to send rate signal
Published: Monday | February 23, 2009
Arthur Hall, Senior Staff Reporter
Under pressure from private-sector leaders to immediately begin a rollback of interest rates, central bank Governor Derick Latibeaudiere has hit the ball back into the court of his critics.
"If the interest-rate signal is there in the next Treasury-bill auction and I saw clearly that people were prepared to accept lower interest rates, and if there is stability in the exchange-rate system as exhibited by responsible bidding and selling, that would be a basis to start the process," Latibeaudiere declared during an interview on the Power 106 FM programme 'Real Business', adding that only then would he know that lower interest rates were sustainable.
He was responding to private-sector leaders who have blasted the Bank of Jamaica over its decision to hike interest rates to defend the Jamaican dollar, which has lost more than 20 per cent of its value since last September. With the Jamaica Manufacturers' Association, the Jamaica Employers' Federation and the Small Business Association
expressing outrage at the hike in interest rates, a formidable army of business leaders has lined up against Latibeaudiere and his technocrats.
Their fire has been fuelled by Finance Minister Audley Shaw, who used a recent radio interview to voice his desire for lower interest rates.
But Latibeaudiere, who has led the central bank for more than 12 years, is defending his team which, he said, had few options.
"You have a demand/supply disequilibrium. You either work on the supply, and the supply, as we know, is to sell goods into the international markets, or to enhance supply, governments could possibly borrow, but the markets are closed.
"We have received some multilateral funds but there is not an endless supply of that," Latibeaudiere argued.
He said to deal with the disequilibrium in the foreign exchange market, the other option was to address the demand for foreign currency.
"In order to deal with demand, you have to introduce tighter fiscal policies and/or higher interest rates. There is hardly any option there.
"It is not like there is a set of options that the technical team can't see or implement," Latibeaudiere charged.
arthur.hall@gleanerjm.com
http://www.jamaica-gleaner.com/glean...ead/lead6.html
Published: Monday | February 23, 2009
Arthur Hall, Senior Staff Reporter
Under pressure from private-sector leaders to immediately begin a rollback of interest rates, central bank Governor Derick Latibeaudiere has hit the ball back into the court of his critics.
"If the interest-rate signal is there in the next Treasury-bill auction and I saw clearly that people were prepared to accept lower interest rates, and if there is stability in the exchange-rate system as exhibited by responsible bidding and selling, that would be a basis to start the process," Latibeaudiere declared during an interview on the Power 106 FM programme 'Real Business', adding that only then would he know that lower interest rates were sustainable.
He was responding to private-sector leaders who have blasted the Bank of Jamaica over its decision to hike interest rates to defend the Jamaican dollar, which has lost more than 20 per cent of its value since last September. With the Jamaica Manufacturers' Association, the Jamaica Employers' Federation and the Small Business Association
expressing outrage at the hike in interest rates, a formidable army of business leaders has lined up against Latibeaudiere and his technocrats.
Their fire has been fuelled by Finance Minister Audley Shaw, who used a recent radio interview to voice his desire for lower interest rates.
But Latibeaudiere, who has led the central bank for more than 12 years, is defending his team which, he said, had few options.
"You have a demand/supply disequilibrium. You either work on the supply, and the supply, as we know, is to sell goods into the international markets, or to enhance supply, governments could possibly borrow, but the markets are closed.
"We have received some multilateral funds but there is not an endless supply of that," Latibeaudiere argued.
He said to deal with the disequilibrium in the foreign exchange market, the other option was to address the demand for foreign currency.
"In order to deal with demand, you have to introduce tighter fiscal policies and/or higher interest rates. There is hardly any option there.
"It is not like there is a set of options that the technical team can't see or implement," Latibeaudiere charged.
arthur.hall@gleanerjm.com
http://www.jamaica-gleaner.com/glean...ead/lead6.html