The issue of commercial banks refusing to lower their interest rates in line with the Bank of Jamaica’s policy rate may need to be addressed through legislation.

This was stated by BOJ Governor Richard Byles during yesterday’s meeting of Parliament’s Economy and Production Committee.

The contentious issue was raised by Committee member Anthony Hylton, who lamented that the reduced policy rate is not benefiting businesses or ordinary Jamaicans. He questioned whether the BOJ had plans to address the matter.

In response, Governor Byles sought to explain that the issue partially lies with the fact that two deposit-taking institutions dominate the market, holding some 60 percent of savings accounts.

He said the banking system must be democratized.

Governor Byles further noted that the Bank of Jamaica is contemplating addressing the issue through legal means.

The central bank lowered its benchmark policy rate four consecutive times in 2024.

Despite this, there has been no corresponding reduction in interest rates among Jamaica’s leading commercial banks.

Several business groups have urged the banks to lower their rates to ensure that the benefits of monetary policy are transmitted to businesses and consumers.