Publication date: 5 February 2021 | Covering: January 2021
Monthly Briefing
- Biden inaugurated January 20; new administration proposes US$1.9 trillion additional COVID relief package
- Fed January 26–27 holds 0.00–0.25%; economy “well below” employment goal; full accommodation reiterated
- US January COVID wave peaking; vaccination programme accelerating; Pfizer and Moderna in deployment
- BOJ overnight rate at pandemic-era low; Jamaica economic recovery continuing; COVID restrictions maintained
- NHT individual ceiling J$6.5 million; rates 0, 2, 4 per cent; housing demand resilient through pandemic
- Jamaica winter tourism season underway at reduced levels; diaspora remittances remain a key household support
Biden Administration: New Stimulus and New Direction
Joseph Biden was inaugurated as the 46th President of the United States on 20 January 2021, bringing to an end a period of extraordinary political turbulence that had culminated in the January 6 assault on the US Capitol. The new administration moved immediately on several fronts: an accelerated national vaccination strategy, a series of executive orders on pandemic response and economic policy, and a legislative push for additional COVID relief. On 14 January, President-elect Biden had unveiled a proposal for US$1.9 trillion in additional fiscal stimulus, encompassing US$1,400 direct payments, extended unemployment benefits, state and local government support, and vaccine funding. The proposal was submitted to Congress shortly after the inauguration, with the administration seeking passage through the budget reconciliation process that would allow the bill to advance with a simple Senate majority.
For Jamaica, the transition to the Biden administration represents a policy continuity in the most relevant economic dimensions: US monetary policy remains accommodative under Federal Reserve Chair Powell, who has been confirmed in his role, and the prospect of significant additional US fiscal stimulus supports the external demand environment. US employment conditions, which drive remittance flows to Jamaica, have been recovering and would receive further support from additional stimulus. The tourism recovery trajectory will also be influenced by the Biden administration’s vaccination success and any associated decisions on international travel protocols.
Federal Reserve January Meeting: Rates at Zero, Accommodation Unwavering
The Federal Open Market Committee held the federal funds rate at 0.00 to 0.25 per cent at its January 26 to 27, 2021 meeting and maintained the US$120 billion monthly asset purchase programme unchanged. Chair Powell’s press conference provided a candid assessment of the economic situation: while the recovery had been stronger than expected in 2020, the labour market remained “well below” levels consistent with the Committee’s maximum employment mandate, with millions of Americans still out of work. The FOMC reiterated its forward guidance: rates would remain near zero and asset purchases would continue until “substantial further progress” had been achieved on both employment and inflation. Powell was clear that the bar for tapering was not yet met and that the Committee had not yet “begun talking about talking about” reducing asset purchases.
The January meeting occurred just days after the inauguration and amid the severe January COVID wave, providing the FOMC with clear justification for maintaining maximum accommodation. For Jamaica’s mortgage market, the Fed’s January communication reinforced the outlook for an extended period of US near-zero rates, sustaining the global financial backdrop in which Jamaican lenders can maintain competitive mortgage offerings. The commitment to large-scale asset purchases keeps global liquidity ample and long-term rates anchored, conditions that support the ability of Jamaican financial institutions to fund their mortgage portfolios.
COVID in January: A Brutal Wave, a Vaccine Horizon
January 2021 produced the most severe COVID-19 wave to date in the United States, with daily case counts peaking above 300,000 in the first week of the month before beginning a gradual decline. Hospitalisations reached record levels, straining healthcare systems across multiple states. The winter surge — driven by the combination of holiday mixing, cold-weather indoor activity, and the emergence of new variants including the B.1.1.7 strain first identified in the United Kingdom — imposed significant human and economic costs. However, the vaccine rollout provided a counterpoint to the grim near-term data: both Pfizer-BioNTech and Moderna vaccines were in deployment, vaccination rates were accelerating, and the trajectory toward meaningful population immunity by mid-year was becoming clearer.
In Jamaica, January 2021 saw continued COVID-related restrictions as the government managed community transmission risk. The island had not yet received vaccine doses — COVAX deliveries were expected in the coming months — and relied on non-pharmaceutical measures including curfews, gathering limits, and protocols for businesses and public spaces. The economic cost of sustained restrictions — particularly for the tourism, entertainment, and hospitality sectors — was accumulating, though the government’s CARE programme and other support measures had provided some household income relief through the pandemic period.
Jamaica Mortgage Market: Resilience Through the Storm
The Bank of Jamaica’s pandemic-era accommodative overnight rate continued to underpin the mortgage market through January 2021. Commercial banks and building societies remained active mortgage lenders, with system liquidity supportive of competitive rate offerings. The National Housing Trust’s subsidised loan programme — individual ceiling J$6.5 million, rates 0, 2, and 4 per cent — remained the most accessible housing finance pathway for eligible contributors. The property market had demonstrated notable resilience through the pandemic, with residential demand sustained by structural factors: household formation needs, diaspora and remittance-backed purchases, and the perceived value of homeownership as a financial anchor in an uncertain environment.
Looking Ahead
The US$1.9 trillion American Rescue Plan debate will dominate US economic news through February and into March. The Federal Reserve’s March 16 to 17 meeting will be the next major policy checkpoint, with attention on whether improving economic data and accelerating vaccination prompt any shift in forward guidance. For Jamaica, the arrival of COVAX vaccine doses and the domestic rollout timeline will be closely watched. The winter tourism season’s performance — a critical indicator of the recovery trajectory — will provide important near-term signals for the property and broader economic outlook.
Mortgage & Housing Finance Disclaimer: This publication is for general information only and does not constitute mortgage, financial, legal or investment advice. Mortgage products, lending criteria, interest rates and borrowing costs vary between lenders and may change without notice. Readers should obtain independent advice from a qualified mortgage adviser, financial adviser or legal professional before making financial or property decisions.
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