Bank of Jamaica governor explains 50 bp hike: second-round effects have begun

Victoria Shinder12 October 2026, 08:282 min read

The Bank for International Settlements published on 7 October the press briefing given by Brian Langrin, Governor of the Bank of Jamaica, after the central bank's Monetary Policy Committee raised the policy rate by 50 basis points to 6.0%, effective 29 September. The decision itself is two weeks old; the briefing is the fullest account of why the MPC changed course after holding in August.

Why it moved. In August the MPC kept the rate at 5.50%, judging that inflation came mainly from temporary external and administrative factors. Langrin said that assessment was right at the time, but that since then persistently high energy and transport costs, sustained agricultural inflation, and stronger import demand from post-hurricane rebuilding had extended inflation beyond the horizon of a normal supply disturbance. Continuing to look through it, he said, could let temporary pressures become entrenched. The committee concluded that supply shocks had begun to generate second-round effects.

The numbers.

• Headline inflation rose to 7.9% in August, from 7.5% in July and 1.2% a year earlier — the third month running above the upper limit of the target range.
• Core inflation was 5.2%, unchanged from July and up from 4.2% a year earlier.
• Businesses' 12-month inflation expectations rose to 7.3% in July from 6.7% in June.
• The MPC expects inflation to rise further in the near term and return to the target range by mid-2027, with timing dependent on the conflicts in the Middle East and between Russia and Ukraine.

External conditions. Langrin cited tighter global financial conditions, noting that the U.S. Federal Reserve raised its target range by 25 basis points to 3.75–4.0% in September. Jamaica's balance of payments is expected to suffer from higher import costs and lower tourism inflows due to capacity constraints after Hurricane Melissa. The exchange rate was 1.1% stronger year on year as of 24 September. Over the 12 months to August the Bank sold US$1.1 billion through its B-FXITT intervention tool, while buying US$803.4 million more than it sold overall. Gross reserves stood at US$6.6 billion, 143.9% of the Bank's adequacy measure.

Outlook. Risks to inflation over the next eight quarters are tilted to the upside, chiefly stronger pass-through of commodity prices and El Niño-related crop losses. The Bank acknowledged concerns about weak near-term growth and said it "stands ready to act" if risks materialise.

Source: BIS, speech by Brian Langrin, Governor of the Bank of Jamaica, Kingston, 29 September 2026 — https://www.bis.org/speeches/20261007-update-and-outlook-jamaican-economy