The Central Bank of Trinidad & Tobago held its benchmark repo rate steady at 2.75 percent, saying its current accommodative stance was appropriate in light of subdued price pressures, slow demand for credit and an expected improvement in economic activity in the course of 2013.
The central bank, which cut rates by 25 basis points in 2012, said the headline inflation rate rose by 0.3 percent in February for an annual rate of 5.9 percent, down from January's 7.3 percent, due to a decline in food price inflation to 10.6 percent from 13.8 percent.
The annual core inflation rate, which excludes food, slipped to 2.1 percent in February from 2.2 percent in January, the central bank added.
Credit to the private sector remained subdued, slowing to an annual rise of 1.9 percent in January from 2.1 percent in December as credit to private businesses declined for the second consecutive month while loans to consumers and real estate mortgage lending rose.
"On account of significant net domestic fiscal injections and relatively low demand for credit, liquidity in the financial system continued to increase," the central bank said, with banks' excess reserves at the central bank up to a daily average of $5,961.9 million from $5,125.5 million.
The central bank said foreign exchange sales helped remove $415 million from the banking system and the "the central bank stands ready to employ additional measures in coming month based on the evolution of financial system liquidity."
Trinidad and Tobago's Gross Domestic Product contracted by an annual 1.79 percent in the second quarter.