NASSAU, BAHAMAS — The Central Bank Governor said yesterday that consumers could see further increases in inflation before it starts to taper off, according to Central Bank Governor John Rolle.
“It’s difficult to say yet whether inflation in The Bahamas has peaked yet,” he said at yesterday’s quarterly press briefing.
“What people would observe is that the published inflation rates in The Bahamas have been lower than those in the United States. To the extent that we are trailing the US we could conceivably see further rises in the rate of inflation before it starts to taper off. That is not to say we will see a one-to-one rate of inflation at its highest as there was in the US.”
Rolle added: “The concern that Central Banks have when looking at prolonged inflation is that if it isn’t dealt with it becomes a distraction and leads to less than optimal activity on the part of businesses in terms of what they are doing regarding their investment planning and it could lead to an uncontrolled spiral in terms of pressures in the wage setting and negotiating process in the private sector. You could have almost a self-sustaining process of inflation that’s not even grounded in what’s going on in terms of the demand for goods and services.”
The Central Bank Governor also noted that with the country importing a substantial amount of goods there is also concern that a slightly enlarged tranche of the country’s foreign exchange earnings is being diverted into consumption as opposed to savings.
Meanwhile, Rolle revealed yesterday that the regulator’s savings bond initiative for smaller investors is expected to come on stream this year.
“We are very close to sharing with the Ministry of Finance some of the work we have done around the structure of that facility,” he said.
“It is targeting small individuals and retail investors who can take a disciplined, long-term incremental approach to savings. This is primarily focused on encouraging savings and giving smaller investors access to the kinds of returns institutional and large investors receive from government instruments. It will not be conceived on any level as a stop-gap measure to the government’s overall financing needs,” Rolle explained.