Jamaica's central bank lowered its policy interest rate by 25 basis points to 0.50%, citing the need for a policy response to maintain inflation within its target range.
Although inflation is projected to average 4.3% over the next eight quarters, within Bank of Jamaica's target range of 4.0% to 6.0%, it will likely fall below the target at various points over this period in the absence of a policy response, the central bank said.
As with its earlier rate cut of 50 basis points in May, the most recent reduction also aims to "stimulate a faster expansion in private sector credit, which should lead to higher economic activity."
"This action will support inflation returning more quickly to the center of the target," the regulator added.
The decision comes after annual inflation in the Caribbean country increased to 4.3% in July from 4.2% in the previous month and 3.2% a year earlier.
Commenting on other economic factors, the central bank said its foreign reserves are adequate while labor market conditions continue to improve amid strong fiscal performance.
A number of central banks in Latin America and the Caribbean, including the region's two largest economic of Brazil and Mexico, have relaxed monetary policy in 2019 due to growth and inflation concerns.
Bank of Jamaica's next policy decision is scheduled for Sept. 30.
