The Bank of Jamaica (BOJ) has acknowledged that it overestimated the impact of decreases in Jamaica Urban Transit Company (JUTC) bus fares on inflation.
In a press release issued on Friday, the BOJ accepted full accountability and expressed regret for its inaccurate estimation, which prompted Minister of Finance Dr Nigel Clarke to declare a two-stage reduction in JUTC fares in November.
BOJ Governor Richard Byles conceded that the two-phase reduction is now anticipated to only offset annual inflation by 0.2 per cent.
In November of last year, when advising Clarke on the issue, the BOJ had approximated that the combined effect of public passenger fare hikes would add roughly two percentage points to annual inflation.
This estimation guided the BOJ in advising Clarke on the necessary reductions in JUTC fares to mitigate the impact of the public passenger fare hikes on inflation.
“Upon review, the Bank now recognises that it had overestimated the impact of the reductions in JUTC fares on inflation. Bank of Jamaica takes full responsibility and apologises for this error,” the BOJ said.
Following the finance minister’s announcement of the temporary two-phase reduction in JUTC fares, the BOJ had forecasted that inflation would generally remain within the targeted 4 to 6 per cent range.
