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The Bank of Jamaica in downtown Kingston, Jamaica (Photo: Jamaica Observer)

Jamaica competes for lowest interest rate among emerging markets

The Bank of Jamaica in downtown Kingston, Jamaica (Photo: Jamaica Observer)

News analysts are making note of the rampant interest rate cuts by emerging market central banks with their analysis showing that Jamaica is among the lowest among over thirty countries which are using monetary policy to ginger up growth.

Jamaica’s interest rate is among the lowest of over 30 countries using monetary policy to improve growth. (Photo: commons.wikipedia.com)

The Bank of Jamaica cut its interest rate by 25 basis points to 0.50 per cent on August 28.  Globally among 37 banks tracked by news agency Reuters, Jamaica’s rate cut is closest to South Korea where the central bank cut its policy interest rate for the second time in three months on Oct 16.  The main benchmark rate now stands at 1.25 per cent.

Next in line is Chile where the central bank slashed its benchmark interest rate on Oct 23 to 1.75 per cent from 2 per cent, its third major rate cut since June 2019.

The Bank of Jamaica in downtown Kingston, Jamaica (Photo: Jamaica Observer)

Others in this range are Mauritius whose central bank on August 9, cut the repo rate by 0.15 basis points to 3.35 per cent and Costa Rica where the central bank cut the key policy rate by 50bps to 3.25 per cent on October 30.

In Serbia the central bank cut its benchmark interest rate by 25 basis points to 2.25 per cent on November 6 to boost growth.

Tajikistan cut its refinancing rate to 12.25 per cent from 13.25 per cent on December 2.  Kenya cut its benchmark lending rate by 50 basis points to 8.5 per cent, its first reduction in more than a year on November 25.  

Among those who have lowered rates also are Mexico where on November 14  key interest rates were reduced  by 25 basis points to 7.50 per cent  flagging that the economic growth outlook had likely worsened in recent months.

In Egypt, the overnight deposit and lending rates were cut by 100 basis (bps) points to 12.25 per cent and 13.25 per cent respectively.

In Brazil, the central bank cut its benchmark interest rate to 5.00 per cent on Oct 30.

Opposing the trend was Zambia where central bankers raised the benchmark lending rate by 125 basis points to 11.5 per cent on November 20, citing rising  inflation and the need to restore macroeconomic stability.

In large part the reasons and conditions surrounding the adjustments have varied, but for most the bottom line is the quest to see economic growth occur at a faster pace.