Tweet
<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD><SPAN class=Subheadline></SPAN></TD></TR><TR><TD>By Al Edwards
Sunday, February 18, 2007
</TD></TR></TBODY></TABLE>
<P class=StoryText align=justify>The ability to contain inflation has proven to be one of the bright spots of the Jamaican economy. For the December quarter, headline inflation was 0.3 per cent, well below the average increase of 2.9 per cent for the last 5 December quarters. With this out-turn, headline inflation for the calendar year 2006 was 5.8 per cent. This compares with 12.9 per cent for 2005.<TABLE cellSpacing=0 cellPadding=5 width=120 align=left border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>Latibeaudiere... The inflation out-turn for the calendar year benefited from the sharp reversal in international oil prices and lower prices for agricultural commodities in the second half of the year </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>The inflation for 2006 was therefore the lowest for a calendar year since 1981.
So declared governor of the Bank of Jamaica (BOJ) Derick Latibeaudiere at his Quarterly Press Briefing held at the BOJ's Nethersole Place headquarters last week.<P class=StoryText align=justify>Explaining this good news, Latibeaudiere said: "The inflation out-turn for the calendar year benefited from the sharp reversal in international oil prices and lower prices for agricultural commodities in the second half of the year, and more-so in the review quarter."
Indeed, crude oil prices fell by 14.8 per cent to an average of US$60 per barrel in the December quarter - the sharpest decline in oil prices since the June 2003 quarter.<P class=StoryText align=justify>At the same time favourable weather conditions contributed to increased supplies and lower prices for agricultural commodities, particularly starchy foods. The quarter under review also saw monetary impulses well contained and the foreign exchange market remained stable.<P class=StoryText align=justify>Looking to the rest of the year, the Governor forecasted, "We estimated core inflation at 0.5 per cent for the quarter and 3.3 per cent for the calendar year. This is in line with the BOJ's medium-term trajectory for maintaining annual core inflation below 4.0 per cent."
Going forward, the BOJ expects headline inflation to be in the range of 0.4 per cent - 1.4 per cent for the March 2007 quarter.
"For the fiscal year therefore, we expect headline inflation to be between 6.0 and 7.0 per cent.<P class=StoryText align=justify>Foreign Exchange Market
At the end of last year, the governor presided over falling inflation and a stable foreign exchange market characterised by a Jamaican dollar that showed no signs of impending volatility. He seemed after years to have reached the top of the mountain after a Herculean effort.<P class=StoryText align=justify>However, he has always cautioned that the task now is to maintain this newfound position.
Inflows to the foreign exchange market in the quarter were bolstered by the growth in receipts from private transfers and tourism. In addition, there was lower demand for foreign currency to facilitate payments for imports relative to the September quarter.<P class=StoryText align=justify>Come the start of the year there has been a noticeable fall in the value of the Jamaican dollar with the BOJ increasingly having to take intervention measures. The Governor doesn't seem unduly perturbed and explained why.<P class=StoryText align=justify>"Against the background of positive economic fundamentals, we have no reason to believe that the recent bout of instability in the foreign exchange market in January will result in any major disequilibrium in the market. Information suggests that the demand pressures could have been due to portfolio switching
Sunday, February 18, 2007
</TD></TR></TBODY></TABLE>
<P class=StoryText align=justify>The ability to contain inflation has proven to be one of the bright spots of the Jamaican economy. For the December quarter, headline inflation was 0.3 per cent, well below the average increase of 2.9 per cent for the last 5 December quarters. With this out-turn, headline inflation for the calendar year 2006 was 5.8 per cent. This compares with 12.9 per cent for 2005.<TABLE cellSpacing=0 cellPadding=5 width=120 align=left border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>Latibeaudiere... The inflation out-turn for the calendar year benefited from the sharp reversal in international oil prices and lower prices for agricultural commodities in the second half of the year </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>The inflation for 2006 was therefore the lowest for a calendar year since 1981.So declared governor of the Bank of Jamaica (BOJ) Derick Latibeaudiere at his Quarterly Press Briefing held at the BOJ's Nethersole Place headquarters last week.<P class=StoryText align=justify>Explaining this good news, Latibeaudiere said: "The inflation out-turn for the calendar year benefited from the sharp reversal in international oil prices and lower prices for agricultural commodities in the second half of the year, and more-so in the review quarter."
Indeed, crude oil prices fell by 14.8 per cent to an average of US$60 per barrel in the December quarter - the sharpest decline in oil prices since the June 2003 quarter.<P class=StoryText align=justify>At the same time favourable weather conditions contributed to increased supplies and lower prices for agricultural commodities, particularly starchy foods. The quarter under review also saw monetary impulses well contained and the foreign exchange market remained stable.<P class=StoryText align=justify>Looking to the rest of the year, the Governor forecasted, "We estimated core inflation at 0.5 per cent for the quarter and 3.3 per cent for the calendar year. This is in line with the BOJ's medium-term trajectory for maintaining annual core inflation below 4.0 per cent."
Going forward, the BOJ expects headline inflation to be in the range of 0.4 per cent - 1.4 per cent for the March 2007 quarter.
"For the fiscal year therefore, we expect headline inflation to be between 6.0 and 7.0 per cent.<P class=StoryText align=justify>Foreign Exchange Market
At the end of last year, the governor presided over falling inflation and a stable foreign exchange market characterised by a Jamaican dollar that showed no signs of impending volatility. He seemed after years to have reached the top of the mountain after a Herculean effort.<P class=StoryText align=justify>However, he has always cautioned that the task now is to maintain this newfound position.
Inflows to the foreign exchange market in the quarter were bolstered by the growth in receipts from private transfers and tourism. In addition, there was lower demand for foreign currency to facilitate payments for imports relative to the September quarter.<P class=StoryText align=justify>Come the start of the year there has been a noticeable fall in the value of the Jamaican dollar with the BOJ increasingly having to take intervention measures. The Governor doesn't seem unduly perturbed and explained why.<P class=StoryText align=justify>"Against the background of positive economic fundamentals, we have no reason to believe that the recent bout of instability in the foreign exchange market in January will result in any major disequilibrium in the market. Information suggests that the demand pressures could have been due to portfolio switching