Macro Outlook

Rate held at 5.50%; MPC met 14 & 17 Aug; unanimous. Headline inflation at 7.5% (Jul), up from 6.7% (Jun) and 3.3% (Jul 2025) — second consecutive month above target ceiling, driven by second phase of route taxi/hackney carriage fare increases and pass-through of commodity prices to electricity and services; core inflation 5.2% (Jul) vs 5.0% (Jun). Middle East hostilities unresolved and Russia-Ukraine war intensified, keeping fuel prices elevated; inflation projected to keep breaching target over Sep 2026 quarter before moderating; drought and heat conditions plus post-Hurricane Melissa fiscal expansion adding pressure; stable exchange rate containing pass-through; GDP growth projected 1.0-3.0% for FY 2026/27; risks skewed to the upside. First decision announced under incoming Governor Brian Langrin (took office 18 Aug).

CPI rose 1.2%; index moved to 152.7 from 150.9. Transport surged 6.3% — passenger transport by road up 8.7% from the SECOND PHASE of route taxi/hackney carriage fare increases effective July 1, 2026; fuels/lubricants up 3.5% on higher petrol. Food & Non-Alcoholic Beverages up 0.6% (vegetables/tubers/pulses up 2.3% — Irish potatoes, pumpkin, carrots, cabbage), though fruits/nuts FELL 4.4% (ripe bananas, pineapples, watermelons). Housing up 0.9% from higher electricity (+2.2%), water and sewage rates (+1.3%). Furnishings up 1.5% from the ~6.3% National Minimum Wage increase effective July 1, 2026. Point-to-point 7.5% — well ABOVE BOJ's 4-6% target. P2P by division: Transport 13.6%, Food 9.4%, Education 8.0%, Restaurants 6.7%, Housing 5.2%. By region: Rural +1.4%, Other Urban +1.3%, Kingston Metro +0.6%. Source: STATIN CPI Bulletin, published August 17, 2026.