The Central Bank of The Bahamas reduced the discount rate by 75 basis points to 4.50%. The central bank noted: "The existence of significant slack in the economy removes the near-term threat to the external position from an expansion in credit growth — which has been muted at some 0.7% for the six month period to end April 2011,". The Prime Rate is expected to fall by 75bps to 4.75% from a current 5.50%.
The Bank previously reduced the discount rate by 50 basis points to 5.25% in February 2005, at which time the prime rate also fell from 6.00% to 5.50%. The Bahamas saw annual consumer price inflation of 1.7% in 2010, meanwhile the economy contracted by -0.5% last year.