The Private Sector Organisation of Jamaica (PSOJ) is backing former Senator Don Wehby's proposal for the Ministry of Finance to create a monetary policy committee (MPC) to set interest rate policy, a function that is currently the purview of the Bank of Jamaica.

"Such a committee would ensure that critical decisions regarding interest rates benefit from robust and vigorous deliberations by policy makers with potentially differing views," said the PSOJ in a press statement.

Wehby, who in July ended a two-year run with the government as minister without portfolio in the finance ministry, suggested that circumstances, which included the dismissal of the former governor, had presented an opportunity to restructure the BOJ to set up a monetary policy committee and to split the role of the BOJ chairman from the governorship.

Replacement

Brian Wynter has now replaced Derick Latibeaudiere as central bank chief, and in that role is also the new chair of the BOJ.

The PSOJ, like Wehby, mooted that the board of the BOJ should be guided in monetary policy decisions by an MPC.

But the two differed on the composition.

Wehby proposed three weeks ago that the committee should comprise nine members - five from the central bank and the finance ministry, and four independent appointees including top economists.

The PSOJ proposes a seven member team, which it said should include the governor of the BOJ, along with three other representatives from the central bank and three independent members.

The independent members, the corporate lobby group said, should be nominated by the board of the BOJ with great care being taken to ensure that they have no ties to any financial institution regulated by the BOJ.

"The MPC should meet at regular monthly intervals to deliberate on monetary policy and set interest rates," remarked the PSOJ.

Deliberations

Like Wehby, the association says the committee's deliberations should be made public for purposes of transparency.

"Such a consistent and open rate-setting mechanism would allow our capital markets to absorb and process information more efficiently and ultimately provide greater market stability," the PSOJ release said.

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