BOJ cuts rates again - Benchmark now at 18%

The rate cut became effective Thursday, August 20, placing the new rates in a range of 13.5 per cent to 18 per cent (see insert).
"This rate adjustment comes against the background of a notable decline in inflation and continued stability in the foreign currency market," said the central bank which now projects that annual inflation has fallen to 7.0 per cent in July, compared to 8.9 per cent in June.
The bank is also anticipating a US$320 million inflow from the International Monetary Fund under the deal being brokered with Jamaica for a stand-by facility.
"Inflation expectations, measured by regular surveys of the business sector, continue to fall as input costs have also stabilised over the past six months. This trend is expected to continue and, in conjunction with weak aggregate demand, should temper underlying inflation impulses," added BOJ.
The BOJ's programme of rate cuts is not unexpected, with expectations that when the calendar year ends, central bank chief Derick Latibeaudiere, would have sliced as much as five percentage points off signal rates as the fiscal authorities struggle to bring down the cost of the national debt servicing bill - estimated at $309 billion on a stock of $1.2 trillion this fiscal year.
With the latest cut, Latibeaudiere has already reduced rates by 3.5 points since July.
The top rate is now 2.6 points lower than the benchmark six-month treasury bill which yielded 20.6 per cent in July; the three month yielded 18.46 per cent.