Trinidad and Tobago's central bank left its benchmark repo rate at 4.75 percent, taking note of “the overall economic conditions, the weak inflationary pressures and the current anticipated trajectory of external interest rates.”
The Central Bank of Trinidad and Tobago (CBTT), which has maintained its rate since January 2015, said price pressures were well contained while data showed continued softening of the non-energy sector in construction and distribution in the third quarter while there was curtailed energy sector output relative to the first three quarters of 2015.
Trinidad and Tobago's headline inflation rate declined slightly to 3.0 percent in September from 3.1 percent in August while core inflation, which excludes food prices, rose to 2.3 percent from 2.2 percent.
Trinidad and Tobago's economy remains in recession, with Gross Domestic Product shrinking by an annual rate of 8 percent in the second quarter, the seventh consecutive quarter of shrinkage.
Trinidad's dollar has dropped this year and was also caught up in the overall drop in emerging market currencies following the election of Donald Trump as U.S. president. The TTD was trading at 6.77 to the U.S. dollar today, down 5.2 percent since the star of this year.
The yield differential between TT and U.S. 10-year Treasury securities narrowed to 216 basis points as of Nov. 14 compared with 255 points at the end of October on a growing consensus that the U.S. Federal Reserve will raise rates in the near future, the CBTT said.
The Central Bank of Trinidad and Tobago issued the following statement:
“Since the last Monetary Policy Announcement in September 2016, oil prices rallied to a 15-month high of near US$50 dollars per barrel (WTI) in October, but have declined since. Though oil prices generally remained low, they improved in the third quarter of 2016 and averaged US$44.9 compared to US$39.4 in the first half of the year. Meanwhile, production of crude oil and natural gas, as well as some downstream products, continued to be affected by maintenance and other stoppages by energy companies, leading to curtailed energy sector output relative to the first three quarters of 2015. At the same time, early indicators of non-energy sector activity in the third quarter suggest on-going softening within the construction and distribution sectors. The latest labour force information from the Central Statistical Office (CSO) put the unemployment rate at 4.4 per cent during the second quarter of 2016 compared with 3.2 per cent in the corresponding quarter of 2015.
The next Monetary Policy Announcement is scheduled for January 27th, 2017.”