Concept explainers
1)Identify one possible expansionary
2)Carefully explain in as much detail as possible, how the chosen action will impact the
3)illustrated the overall impact of the chosen action on the money market
In 2019, while there was a mixed approach to monetary policy-setting in the Caribbean, overall the monetary policy stance in the region remained accommodative. Jamaica, for instance, continued to pursue an expansionary monetary policy with the Bank of Jamaica cutting its overnight rates four times in 2019. The overnight rates were reduced from 1.75% in December 2018 to a historic low of 0.50% in August 2019. In contrast, the Central Bank van Suriname increased the reserve requirement for foreign currency deposits and required that at least half of commercial banks’ USD cash deposits and all of the EUR deposits be held at the Bank, in order to maintain a stable exchange rate.
Further, despite the subdued economic activity, the Central Bank of Trinidad and Tobago maintained its monetary policy rate, the repo rate, at 5.00% during the first eleven months of 2019 in consideration of foreign exchange shortages. In the Bahamas, monetary policy was neutral with the
Central Bank holds its policy discount rate at 4.00%.
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