Central Bank of Trinidad and Tobago’s Monetary Policy Statement

Introduction to the Monetary Policy Statement

PORT OF SPAIN, Trinidad, CMC—The Central Bank of Trinidad and Tobago (CBTT) said Friday that the decline in oil and natural gas output, based on maturing fields, continued to challenge overall production of energy-based exports over the short run.

In its latest Monetary Policy Statement, the CBTT said data from the Ministry of Energy and Energy Industries (MEEI) pointed to a year-on-year reduction in crude oil production of minus 1.9 percent and natural gas production of minus 0.8 percent during the third quarter of 2024. However, petrochemical output improved, with ammonia and methanol production rising by 16.1 percent and 1.1 percent, respectively.

Non-Energy Sector Performance

In the non-energy sector, the latest gross domestic product (GDP) data from the Central Statistical Office (CSO) for the first half of 2024 highlighted positive performances in the manufacturing and finance sectors. Still, declines in the construction and accommodation services sectors offset these.

The CBTT noted that “more recent indicators, including on distribution, finance, new car sales, and visitor arrivals for Carnival 2025, point to relative buoyancy in non-energy activities. ”

Financial System Liquidity and Private Sector Credit

It said domestic financial system liquidity remained ample in the first quarter of 2025. Commercial banks’ excess reserves at the Central Bank averaged TT$4.8 billion (One TT dollar = US$0.16 cents) in January before climbing to TT$6.6 billion in February this year.

Data up to March 14 highlighted further increases, with excess liquidity reaching TT$7.2 billion, the CBTT said. In this context, banks did not access the interbank market or the repurchase facility during March 2025.

“While the Government tapped the domestic market for budget financing, banks were simultaneously able to boost their lending to the private sector. Private sector credit from the consolidated financial sector rose 8.4 percent (year-on-year) in January 2025 compared with eight percent a month earlier. Consumer loans grew by 11.6 percent compared with 9.7 percent for business credit and 6.4 percent for real estate mortgage loans.”

Domestic Price Pressures and Inflation

The CBTT said that data from the CSO showed that domestic price pressures are well contained. Headline inflation, as measured by the Consumer Price Index, rose to 0.7 percent (year-on-year) in February 2025 from 0.5 percent in December 2024.

It said core inflation, which excludes food prices, fell by 0.1 percent in February, while food prices rose by 3.9 percent.

“Both domestic and international factors contributed to the upward drift in food prices faced by local consumers. Other available price indicators, such as at the wholesale level and for building materials, also demonstrated sluggishness, increasing by 0.2 percent and 0.6 percent, respectively, in the twelve months to September 2024. ”

The CBTT said that the recent seven percent increase in the price of cement is nonetheless expected to have an important knock-on effect on construction costs.

External Economic Conditions and Monetary Policy

In its assessment of external economic conditions, the CBTT said the Monetary Policy Committee (MPC) took note of the prevailing trade policy uncertainties, possible risks to global inflation, and the more measured monetary policy actions by major central banks. “Domestically, the MPC considered the combination of low inflation, the mixed growth picture, and supportive financial conditions while emphasizing the need for vigilance on credit quality given the increase in bank lending.

“Considering all these factors, the MPC agreed to maintain the repo rate at 3.50 percent,” the CBTT said, adding that it will continue carefully examining and analyzing international and domestic developments and prospects.

Conclusion

The Central Bank of Trinidad and Tobago’s Monetary Policy Statement highlights the challenges facing the country’s energy-based exports and the mixed performance of the non-energy sector. The bank’s decision to maintain the repo rate at 3.50 percent reflects its careful consideration of both domestic and international economic conditions.

Frequently Asked Questions (FAQs)

Q: What is the current repo rate in Trinidad and Tobago?

A: The current repo rate is 3.50 percent.

Q: What is the outlook for energy-based exports in Trinidad and Tobago?

A: The decline in oil and natural gas output, based on maturing fields, is expected to continue to challenge overall production of energy-based exports over the short run.

Q: How has the non-energy sector performed in recent times?

A: The non-energy sector has shown mixed performance, with positive performances in the manufacturing and finance sectors, but declines in the construction and accommodation services sectors.