On the occasion of its meeting on 13 November 2026 and following its review of the financial system’s performance and systemic risks based on data up to September 2026, the Financial Policy Committee (FPC) issues the following statement:
Global macro-financial risks remained heightened during the September 2026 quarter. Persistent geopolitical tensions, particularly the military conflict involving Iran and the United States (US), adversely affected energy markets and trade flows through the Strait of Hormuz. The resulting increase in energy costs and supply-side pressures contributed to inflation remaining above target in several advanced economies. In response, major central banks, including the Federal Reserve, tightened monetary policy during the quarter. Concurrently, concerns regarding the sustainability of rising US public debt exerted upward pressure on sovereign bond yields and contributed to tighter global financial conditions.
Domestically, macro-financial conditions remained broadly supportive of financial system stability. During the September 2026 quarter, Real GDP is estimated to have contracted at a slower pace relative to the June 2026 quarter, reflecting continued recovery from the effects of Hurricane Melissa. At the same time, Bank of Jamaica raised its policy rate by 50 basis points in September 2026 to help contain potential upside risks to inflation. Despite tighter monetary policy, financial market conditions remained generally favourable. Bond yields increased in line with the policy rate adjustments, while foreign exchange market conditions remained orderly, supported by the market’s perception that the Bank’s foreign currency reserve position remains strong. Equity market performance strengthened during the quarter, with the Jamaica Stock Exchange Main Index advancing by 8.9 per cent, reflecting favourable company-specific developments and expectations of a post-Hurricane Melissa recovery, particularly among selected large-capitalization stocks. Credit growth moderated but remained positive, indicating continued demand for financing. Similarly, real estate market activity continued to soften, as indicated by movements in the Bank’s Residential Real Estate Price Index and elevated listing-to-sale completion times for properties sold through the Realtors Association of Jamaica, amid affordability constraints and higher borrowing costs.
Notwithstanding these developments, key domestic prudential indicators including capital adequacy, liquidity and asset quality remained within prescribed thresholds. This resilience reflects the sector’s stable financial position, characterised by sound regulatory oversight and broadly stable financial markets and payment systems.
The near-term macro-financial outlook remains subject to significant uncertainty from geopolitical developments, weather-related shocks and shifts in global and domestic policy conditions. These developments could keep inflationary pressures elevated, prolong tighter global monetary and financial conditions, and heighten volatility in international financial markets. The resulting effects on domestic economic activity, asset prices, and borrowers’ repayment capacity could place pressure on the earnings and balance sheets of financial institutions, including insurers, which continue to manage claims and cost pressures associated with Hurricane Melissa. In this environment, vulnerabilities could be amplified by interconnections within the financial system, increasing the potential for stress to transmit more broadly across institutions and markets.
Against this background, stress tests and contagion simulations were conducted to assess the resilience of financial institutions to severe but plausible credit, liquidity and market risk shocks. The results indicate that financial system sub-sectors generally maintain sufficient capital to withstand the contemplated macro-financial stress. However, regulators and financial institutions will need to remain attentive to concentration of financial exposures, evolving market risks and operational vulnerabilities related to cyber resilience that could amplify stress even under more adverse conditions.
The rapid deployment of artificial intelligence (AI) is introducing a new dimension to Jamaica’s cyber threat landscape. AI-enabled cyberattacks have the potential to increase the scale, speed and sophistication of threats facing financial institutions, including through highly convincing phishing campaigns, deepfake impersonation, automated exploitation of system vulnerabilities and increasingly sophisticated financial fraud. For Jamaica’s interconnected financial system, these developments heighten the risks of financial losses, operational disruptions and erosion of public confidence. Against this background, the Bank and the Financial Services Commission will continue to strengthen their supervisory focus on cyber resilience, particularly institutions’ capabilities to detect, respond to and recover from emerging threats, while promoting greater collaboration and timely sharing of cyber threat intelligence across the financial sector.
Bank of Jamaica will continue to prioritise the development and implementation of key macroprudential tools, including the Countercyclical Capital Buffer and Systemic Risk Buffer, to limit the build-up of systemic risks. In addition, the Bank will maintain its focus on advancing regulatory reforms, including the implementation of Twin Peaks and Basel III, as well as initiatives to address cyber and climate-related risks. These measures are expected to enhance the resilience of the financial system to macro-financial and operational shocks while facilitating economic activity.
Financial Policy Committee
13 November 2026
