The Small Business Association of Jamaica (SBAJ) has voiced strong criticism towards local commercial banks for their reluctance to lower lending rates in response to the Bank of Jamaica’s (BOJ) recent interest rate reductions.
In a statement released on Monday, the SBAJ highlighted that the BOJ has cut its policy interest rate for the fourth time this year, reducing it to six percent annually as of December 23, 2024. These successive reductions are part of the central bank’s initiative to boost economic activity and make borrowing more affordable for individuals and businesses alike.
Despite these measures, commercial banks have not mirrored the BOJ’s rate cuts in their lending practices. The SBAJ claims that this inaction has left many borrowers burdened with high-interest loans, including auto loans, mortgages, credit card debt, and personal loans.
The association criticized the banks for seemingly prioritizing their profit margins over the financial well-being of the public, arguing that this stance counteracts the BOJ’s efforts to manage the economy effectively. The SBAJ has called for swift intervention to alleviate the financial pressures faced by its members.
Garnett Reid, president of the SBAJ, stated, “Small business owners are already operating on thin margins, and the banks’ failure to reduce interest rates exacerbates their struggles. It’s disheartening to see institutions that should support economic growth instead create additional barriers for those trying to thrive.”
Echoing these concerns, Michael Lecky, the immediate past president of the SBAJ, added, “Our members are dealing with interest rates ranging from 15 to 18 percent on loans, despite the BOJ’s significant rate cuts. This discrepancy is not only unfair but also detrimental to the backbone of our economy—small businesses. The banks are effectively hindering progress by maintaining these high rates.”
The SBAJ has also criticized the Bank Association of Jamaica (BAJ) for not addressing the issue publicly, urging greater transparency and alignment with the BOJ’s monetary policies. Furthermore, the association is calling on the government to step in and ensure that commercial banks adhere to the central bank’s rate adjustments.
Reid emphasized, “If this situation persists, it will cause irreparable harm to the small business sector and the broader economy. We must take immediate steps to hold these financial institutions accountable and ensure they support the growth and sustainability of our businesses.”
The SBAJ remains steadfast in its demand for lower lending rates and is actively seeking collaborative solutions to ensure that the benefits of the BOJ’s policy changes are accessible to those who need them most.
