A SHARP divergence between the central bank's approach to monetary policy and the Ministry of Finance's fiscal policy direction contributed to a more than $15-billion hike in additional interest-rate payments as set out in the First Supplementary Estimates of Expenditure.

This admission came yesterday from Finance and the Public Service Minister Audley Shaw during a meeting of Parliament's Standing Finance Committee which was examining the estimates.

Fielding questions from his opposition counterpart, Shaw said the projected fall in interest rates, as anticipated by the administration, did not materialise.

"You have the monetary side which is monitored by the Bank of Jamaica (BOJ) and you have the fiscal side that the ministry has to deal with in terms of the Budget," Shaw said.

"Sometimes there are conflicts between monetary policy and fiscal policy and those in charge of monetary policy, their primary concern is inflation, their primary concern is the exchange-rate stability and they connect one with the other."

Prompted by Dr Omar Davies, opposition spokesman on finance, Shaw said the Government has "recasted our interest-rate projections on a more conservative trajectory".

The finance minister said he was not publicly castigating BOJ Governor Derick Latibeaudiere for the slow pace at which interest rates were reduced.

Not comfortable

Earlier this year, Shaw indicated that he was not comfortable with the speed with which interest rates were falling at the central bank.

Shaw told the Standing Finance Committee that the central bank governor had achieved exchange-rate stability since February as well as low inflation.

With the steady reduction in interest rates in August and September, Shaw said the BOJ governor was now making the right moves.