Economic Report for September 28, 2026
Local Market Update
The Bank of Jamaica Monetary Policy Committee has unanimously increased the policy interest rate by 50 basis points to 6.0 per cent, marking its most aggressive step this year to combat rising inflation. The decision comes as inflation reached 7.9 per cent in August, remaining above the BOJ’s 4 to 6 per cent target range for a third consecutive month. According to the central bank, inflation pressures are being driven by a combination of higher agricultural prices caused by drought conditions, elevated international commodity prices, stronger domestic spending associated with post-Hurricane Melissa reconstruction activity, and escalating geopolitical tensions in the Middle East and Eastern Europe.
The rate increase reflects growing concern that inflation could become entrenched if businesses and consumers begin to expect prices to continue rising. By raising interest rates, the BOJ aims to slow borrowing and moderate demand within the economy, reducing the likelihood that temporary price increases evolve into sustained inflation. The Bank noted that the risks to inflation have intensified since its previous policy meeting due to worsening global commodity prices and the persistence of adverse weather conditions affecting local food production.
The decision also signals that the BOJ is placing greater weight on inflation control than on stimulating economic activity. While reconstruction spending following Hurricane Melissa continues to support growth, policymakers appear increasingly concerned that higher fuel, food, and transportation costs could undermine price stability. The central bank has indicated that inflation is now expected to remain elevated for longer than previously forecast and may not return to its target range until mid-2027.
Importantly, this move suggests that Jamaican interest rates may remain elevated for an extended period. Commercial bank lending rates, mortgage rates, and other borrowing costs are likely to face upward pressure, while returns on deposits and fixed-income investments could become more attractive. At the same time, the BOJ has emphasized that Jamaica’s international reserves remain strong, providing a buffer against external shocks and helping to support confidence in the country’s financial stability.
I think this version provides much better context because it explains the why, the economic impact, and the likely consequences of the rate hike rather than simply stating that rates increased.
Global Market Update
Tourism and hospitality markets received significant attention following an announcement that Royal Caribbean has agreed to acquire a 50 per cent equity stake in Sandals Resorts for US$3 billion, valuing the Caribbean resort operator at approximately US$6 billion. The transaction is expected to close next year and represents one of the largest investments ever made in the Caribbean tourism sector.
The deal gives Royal Caribbean a substantial presence in the all-inclusive resort market while expanding its strategy of becoming a broader vacation provider beyond cruise operations. For Sandals, the partnership provides access to additional capital and growth opportunities while reinforcing the continued attractiveness of Caribbean tourism assets to international investors.
Meanwhile, global central banks continue to wrestle with inflation challenges. In addition to Jamaica’s rate increase, the Bank of Japan recently moved policy rates to their highest level in decades, reflecting a broader global trend of monetary authorities prioritising price stability amid persistent inflation risks and geopolitical uncertainty.
Investor Implications
For Jamaicans, the BOJ’s decision to raise interest rates will likely be felt through higher borrowing costs on loans and mortgages, while savers may benefit from improved returns on deposits and other interest-bearing investments. The move signals that controlling inflation remains the central bank’s top priority as food, fuel, and other living costs continue to face upward pressure.
The Sandals-Royal Caribbean transaction is an encouraging signal for the local economy and tourism sector. A multi-billion-dollar valuation for a Caribbean hospitality brand highlights continued international confidence in regional tourism despite global economic uncertainty. Increased investment in tourism infrastructure could support employment, foreign exchange earnings, and long-term growth across the region.
For both MML customers and the wider investing public, the current environment underscores the importance of balancing growth opportunities with protection against inflation. Higher interest rates generally favour income-producing investments and disciplined saving strategies, while continued strength in tourism and foreign investment remains supportive of Jamaica’s long-term economic outlook. Maintaining a diversified portfolio remains one of the most effective ways to navigate a period of elevated inflation and global uncertainty.
Make This Rate Environment Work for You
With inflation at 7.9 per cent and the BOJ signalling that rates will stay elevated, cash sitting idle loses purchasing power every month. A clear investment plan can change that.
MoneyMasters Limited (MML) offers professionally managed Collective Investment Scheme (CIS) funds, so you can diversify without picking individual securities yourself. Our range includes the MoneyBuilder Fund, Growth Fund, Equity Fund, and M7 Real Estate Fund. Each serves a different goal, from steady income to long-term growth. You can also track your portfolio in real time on our AXIA platform.
Talk to an MML Investment Consultant today. We’ll match your goals, timeline, and risk tolerance to the right mix.
Investments in CIS funds are not guaranteed, and unit values can fall as well as rise. Past performance does not indicate future results. MML is licensed by the Financial Services Commission (FSC).