The Monetary Policy Committee (MPC) of the Central Bank of Trinidad and Tobago has opted to maintain its repo rate at 3.50 per cent.

This, despite an increase in inflation and amid generally stable global economic conditions.

According to the MPC’s latest Monetary Policy Announcement for June 2024, “Domestically, the low level of inflation and buoyancy of credit were supportive of the ongoing economic recovery, although the negative interest rate differential warranted close monitoring given its potential impact on the country’s external balance.” 

The MPC points to the latest data from the Central Statistical Office (CSO), which showed that headline inflation rose to 0.9 per cent (year-on-year) in May 2024 from 0.5 per cent one month earlier. With core inflation (which excludes food prices) unchanged at 0.3 per cent, higher food prices were primarily responsible for the upward drift of inflation. Food inflation accelerated to 3.1 per cent in May compared with 1.1 per cent in April 2024 on account of price increases for several locally produced and imported food items.

Further, the MPC highlights that there are positive signs in terms of domestic economic recovery.

According to the MPC, “Production indicators monitored by the central bank during the fourth quarter of 2023 and into the first three months of 2024, such as local sales of cement and new motor vehicle sales, point to vibrancy in some non-energy sectors. Meanwhile, data from the Ministry of Energy and Energy Industries indicate that crude oil and natural gas outputs from the mature fields continued to slip over this period. 

In terms of the financial sector, the MPC says liquidity in the financial sector remained “ample” despite figures dropping slightly compared to last year. Finally, the MPC notes that interest rates on three-month treasuries in T&T continued to trend upwards, rising by 27 basis points (bps) since February 2024. 

This has resulted in the differential between T&T and US three-month treasuries moving to -4.06 per cent in May 2024 from 4.32 per cent in February.