BOJ apologizes for error concerning impact JUTC fare cut would have on inflation; Opposition says Finance Minister also responsible

The Bank of Jamaica (BOJ) has apologized for the error made in relation to the impact the Jamaica Urban Transit Company’s (JUTC) fare cut would have on inflation.

This after Opposition Spokesman on Finance Julian Robinson criticized Finance Minister Dr. Nigel Clarke for what he says were attempts to fix breaches of the inflation target with the reduction, as it was a bad policy directive.

At the time of the policy announcement, Dr. Clarke said the JUTC fare reduction formed part of measures to curtail the impact of the increase in public passenger vehicle (PPV) fares on the overall inflation rate.

However, at a press conference on Wednesday, the Central Bank said inflation will remain higher than targeted until next year, due to the hike in taxi fares, among other things.

In a release today, the BOJ said it takes full responsibility for its overestimation.

It explained that in early November last year, the Bank shared with the Finance Minister its concern that inflation was projected to rise above the target range over an extended period, driven largely by the PPV fare increases announced by the Government on October 10, 2023.

The BOJ added that an estimate of the cumulative impact of the increases in PPV fares, as contributing approximately two percentage points to annual inflation was also shared with the Minister.

The Central Bank said it also advised the Minister of its estimate of required reductions in JUTC fares to cushion the impact of the announced PPV fare increases.

It said it was then that the Minister made the November 21 announcement regarding the temporary two-phase reduction in JUTC fares to support BOJ’s inflation-targeting mandate.

Meanwhile, Despite the Central Bank taking full responsibility for its overestimation, Robinson says the policy is the prerogative of the Cabinet which is the country’s executive.

He says Finance Minister, Dr. Nigel Clarke should also accept responsibility for the bad policy directive.


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