Inflation Targeting vs Stabilizing the JMD-USD Exchange Rate
In the face of increasing USD interest rates, stabilizing the exchange rate would mean increasing our policy rate (which would be the wrong signal to the banks) as well as managing shocks by spending the precious reserves. I prefer strengthening the monetary link by getting the banks to lend (at low rates) to producers of goods and services, especially SMEs in our case. We can increase the bank reserves and refund what they lend to productive SMEs. Their profits can withstand it, and it will force them to get proficient at lending to the many, instead of the few. -RG In response to: Densil Williams | Is inflation targeting the answer?