Trinidad and Tobago's central bank held its benchmark repo rate steady at 2.75 percent, saying partial data on the non-energy sector in the third quarter indicates a mixed performance, suggesting "that the economy still remains on its path of slow but steady recovery."
The Central Bank of Trinidad and Tobago, which cut its rate by 25 basis points in 2012, said planned maintenance by two major natural gas products and shutdowns in the downstream industry in September led to a contraction of just over 4 percent, year-on-year, in energy production in the third quarter. However, with most of the maintenance work completed, output will return to more normal levels in 2014.
Trinidad & Tobago's Gross Domestic Product contracted by an annual 1.15 percent in the second quarter, down from an expansion of 0.66 percent in the first quarter. In 2012 the country's economy expanding by 0.2 percent after contracting by 2.6 percent in 2011. The IMF forecasts growth of 1.6 percent this year and 2.3 percent in 2014.
The central bank said headline inflation in the 12 months to October decelerated to 2.7 percent from 3.0 percent in September, mainly due to a slowdown in core inflation that was 1.9 percent in October, down from 2.9 percent.
"However, the recent heavy rains and resulting floods in Trinidad may lead to some up-tick in food inflation in the coming months," the bank said.
Despite a narrowing of the interest rate differential between longer term Trinidad & Tobago and U.S. Treasury bonds, the central bank said there was not evidence of disruptive portfolio flows. The differential fell to minus 29 basis points in November from minus 20 points in October, the bank said.