Repo Rates

Down town Port of Spain, Trinidad.

The Trinidad and Tobago economy remains growth-challenged, but early signs of improvement have appeared in the energy sector as exploration activity picked up in the third quarter.
Output of natural gas is expected to rise with the coming on-stream of the Juniper project, the Central Bank of Trinidad and Tobago stated recently, flowing from their decision to hold the bank’s repo rate at its current level of 4.75 percent.
The report goes on to state that “growth in energy and energy-related production is expected to eventually spur activity in other (non-energy) sectors that are still subdued.” “Available indicators on construction and distribution point to continued sluggishness in these areas. However, official statistics suggest that the unemployment rate has remained relatively steady at just under 4 percent on average in 2016.”
The rate of increase in general prices in Trinidad and Tobago remained low. Data from the Central Statistical Office point to headline inflation of 1.4 percent in July 2017 (12-month basis), with core inflation, which excludes food prices, also at 1.4 percent. The average for both these measures over the year to July was 2.2 percent and 2.1 percent respectively. Food inflation measured 1.4 percent in July 2017 compared to 0.5 percent in June.
The central bank reported that “Interest rates in the banking system have remained virtually unchanged for the year so far. The strongest loan categories in July were for consumers (4.1 percent growth year-on year), including the sub components for real estate mortgages (5.0 percent) and credit cards (8.3 percent), while credit to businesses increased by just 0.3 percent.”
“Liquidity in the commercial banking system remained steady in the third quarter of 2017 with banks’ excess reserves at the Central Bank averaging around $2.8 to $3 billion. There was a small increase in the TT-US interest rate differential on 3-month Treasuries from 14 to 16 basis points between July and mid-September 2017.”

Repo rate hiked

September 28, 2015 by IC Insider.com

Repo rates moved up by 25 basis points to 4 ½ percent in Trinidad & Tobago. At its September 2015 meeting, the Central Bank’s Monetary Policy Committee (MPC) agreed to increase the ‘Repo’ rate for a seventh consecutive time to 4.5 percent.
According to the central bank, the most influential factor behind the MPC’s decision remains the normalization of US monetary policy which could reduce capital flows to many emerging market economies, including Trinidad and Tobago, which is already adjusting to persistently low energy prices. The MPC also judged the domestic monetary policy stance as still very accommodative in the context of a contracting non-energy sector and moderate inflationary pressures.
The central bank last increased repo rates in July by 25 basis points to 4.25 percent, then the bankers stated apart from similar reasons as above that locally, rising inflationary pressures remain a concern for the MPC. Headline inflation held steady at just over 5 ½ percent in June 2015, while core inflation slowed marginally to just below 2 percent. However, the MPC expects inflationary pressures to pick up in the remaining months of 2015 due to a number of factors.
The central bankers stated that domestic inflationary pressures have not materialized as initially expected. On a year-on-year basis to August 2015, headline inflation slowed to 4 percent from just over 5 ½ percent in July 2015. Core inflation was stable at just over 1 ½ percent, while food inflation decelerated to around 8 percent from double-digit territory of 11 ½ percent in July 2015. Although current price pressures seem contained, disruptions to domestic agricultural supply and higher production costs facing select food industries could lead to rising food inflation. Increased consumer spending driven in part by recently concluded public sector wage agreements, as well as robust consumer borrowing, could also push up inflationary pressures.