Firstcaribbean hiking interest rates

Firstcaribbean international Bank (Jamaica) Limited (Fcib) will be hiking the interest rate on existing variable rate loans by 50 basis points or 0.50 per cent on november 1 as the Bank of Jamaica (BOJ) continues to hike its policy rate amid high inflation.

The rate hike will only be applied to small business loans and mortgages along with personal and small and medium-sized enterprise (SME) clients. FCIB Jamaica has retail and business banking as one segment of its operations and corporate and investment banking as the other segment. This action by FCIB Jamaica leaves the Bank of Nova Scotia (Jamaica) Limited, The Scotia Jamaica Building Society and Citibank NA – Jamaica as the only deposit-taking

Holness...we pride ourselves for being among the lowest and one of the last FIS to adjust its rates

institutions which have not announced a broad rate hike on variable rate loans for all of its customers or a specific segment.

“Clients are being advised of this adjustment via direct mail, notices in our branches and our online banking platform. The decision to increase rates at this time was not taken lightly. However, over the past several months the Bank of Jamaica has significantly increased its policy rates, in response to rising inflation. Although our rates will be increasing, we pride ourselves for being among the lowest and one of the last FIS [financial institutions] to adjust its rates,” said FCIB Jamaica Managing Director Nigel Holness in an e-mail to the Jamaica Observer.

The BOJ’S policy rate had remained at 0.50 per cent from August 2019 to 2021 which was a historic low in modern-day Jamaica. However, based on the expectation that inflation would continue to breach its target range of four to six per cent, the BOJ initiated a series of rate hikes to combat inflation along with tightening its accommodation stance. Eight rate hikes later and the policy rate stands at 6.00 per cent as of August 19 with the BOJ’S next Monetary Policy Committee meeting set for September 29.

Point-to-point inflation peaked at 11.8 per cent for April but has since trended down to 10.2 per cent as of August. While this trend might appear to be welcoming, the point-to-point mark remained unchanged from July with May and June at 10.9 per cent. This remains well outside of the BOJ’S range as it continues to act as an independent central bank. The BOJ acted in the foreign exchange market last Thursday and Friday with US$30 million on each day with its BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT).

JMMB Bank (Jamaica) Limited, Sagicor Bank Jamaica Limited, The Victoria Mutual Building Society and Cornerstone Trust and Merchant Bank Limited all announced this year that they were increasing their variable interest