The Bank of Jamaica just slashed interest rates again, but will we finally start to see local stocks doing better?

I’m Kalilah Reynolds, founder and CEO of Money Media, money made simple.

So Jamaica’s policy interest rate is now down to six point five percent. It had been at 7 percent for almost two years, to try keep inflation down.

But in doing that, it also made business more expensive for a lot of companies… including a lot of companies listed on the stock market.

That, coupled with the fact that investors were getting better returns on other instruments like CDs and bonds, led to an exodus from the stock market.  This in turn caused stock prices to fall.  With me so far?

But with the BOJ finally loosening the reins, could we start to see some movement in the market again?

Here’s what Senior Trader at JMMB, Andre Reid, said on Taking Stock this week. 

“There are some beginnings of portfolio shifts actually happening but just 50 basis points is probably not enough to say yes we are in the middle of an interest rate reduction cycle. I think we’re still in the fairly early stages but there are portfolios that are actually moving towards equity because they believe that the the lower cost of funding should translate to better or improve the balance sheets,” he said.

So, like he said, there’s already some positive movement for some stocks.  And lower interest rates do tip the favour back towards equities over bonds and CDs

But this reduction probably isn’t enough to start the bull run that a lot of people are waiting for. However, if the BOJ continues cutting rates even further, we could be in for a good 2025 on the Jamaica Stock Exchange.