Saturday, January 26, 2013

Trinidad & Tobago holds rate, economy still needs support

    Trinidad & Tobago's central bank held its benchmark repo rate steady at 2.75 percent, saying the accommodative policy stance was still necessary to sustain the gradual recovery amid stable inflation and subdued demand for credit.
    The Central Bank of Trinidad & Tobago, which cut its rate by 25 basis points in 2012, said the annual inflation rate slowed further to 7.2 percent in December from November's 8.1 percent and last year's high of 12.6 percent in May. Core inflation was steady at 3.1 percent in December, suggesting that underlying inflationary pressures are still relatively subdued.
    On average 2012 inflation was 9.3 percent, up from 5.2 percent in 2011.
    "Although there were some encouraging sings of a recovery in domestic economic activity during the third quarter of 2012, credit demand is still quite subdued as evidenced by the slower-than-anticipated pace of loan growth in the banking system," the central bank said, adding:
   "With core inflation relatively well contained at around 3 percent, the Bank has decided to maintain its accommodative monetary policy stance to sustain the nascent recovery in economic activity."

    Last month the central bank said economic activity was likely to remain subdued in the third quarter.
    Gross Domestic Product contracted by an annual rate of 1.8 percent in the second quarter, a deeper decline than the first quarter's 0.49 percent.
    Earlier this month the central bank's governor said he was cautiously optimistic for 2013 and forecasting economic growth of 2.5 percent.



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