Friday, December 21, 2012

Trinidad & Tobago holds rate to boost growth, CPI slows

    The Central Bank of Trinidad and Tobago kept its benchmark repurchase rate unchanged at 2.75 percent, saying it was maintaining an accommodative policy stance to support economic growth while inflationary pressures were under control.
    The central bank, which cut rates by 25 basis points in September, said economic activity was likely to remain subdued in the third quarter and the slow pace of growth in "consumer and business credit suggests that demand has not picked up sufficiently to create the momentum for a sustained economic recovery."
    Trinidad & Tobago's first quarter Gross Domestic Product fell by an annual 0.35 percent, down from an annual expansion of 0.34 percent in the fourth quarter of last year.
    The headline annual inflation rate slowed to 8.1 percent in November from October's 9.4 percent due to a decline in the growth of food prices, the bank said.
    "With underlying inflationary pressures in check, the Bank continues to adopt an accommodative monetary stance to support the resurgence of economic activity, especially in the non-energy sector," the central bank said in a statement.
    The central bank said food price inflation slowed to 14.9 percent from 18.2 percent in October.
    Core inflation, which strips out food prices, was 3.1 percent in November, steady from October. 
    Private sector credit rose slightly in October but remains unresponsive to financial conditions, the bank said, adding that real estate mortgage lending continued to expand a robust 11 percent in October. In October private sector credit rose 3.7 percent on an annual basis, up from 3.2 percent in September.
    Liquidity in the financial system remains high with commercial banks' holdings of excess reserves at the central bank rising to a daily average of $4,075 million in the period of Dec. 1-18, up from $3,342 million in the previous month, due to substantial fiscal injections in November and early December.
    Trinidad & Tobago's statistics office is currently updating its method for compiling retail prices to reflect current spending patterns and the rebasing exercise is expected to be completed in early 2013, the central bank said.


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