EDITORIAL - Conflicting positions on interest spreads

Finance Minister Audley Shaw and his central bank governor, Brian Wynter, perhaps need to have a quiet word, or two, so as to arrive at a consensus and a clear policy on the spread on rates between the Bank of Jamaica's instruments and what commercial banks charge their customers for loans.

Mr Shaw believes the gap is far too wide and should be closing far more rapidly.

Mr Wynter is unperturbed. He believes that banks need time to adjust their portfolios, especially since agreeing in February to the Government's rescheduling of more than $700 billion of domestic debt, at sharply lower rates and longer maturity.

As it now stands, the Government's benchmark 30-day rate is 8.5 per cent. The average by banks for the best borrowers is 17 per cent, which Mr Shaw told a forum by the Financial Services Commission on Wednesday was tantamount to "short-changing customers by keeping interest rates on savings depressed, while maintaining exorbitantly high borrowing rates, even while monetary policy on the market indicates otherwise. That is something that cannot continue," said Mr Shaw, who wants to stimulate investment and growth.

But bankers say, the Government's rescheduling notwithstanding, they remain locked-in to customers at high interest rates - a position Mr Wynter endorsed in a broadcast interview on Thursday.

The minister and the central bank governor risk sending confusing signals to markets - and the population broadly.

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