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CBTT reporting increased liquidity in Trinidad and Tobago

Trinidad Express / Liquidity in the Trinidad and Tobago financial system rose slightly this month after falling in October, with commercial rates averaging $TT3.4 billon (One TT dollar =US$0.16 cents) daily during the first 21 days of November, the Central Bank of Trinidad and Tobago (CBTT) has reported.

It said that it removed TT$725 million from the system through open market operations while the bank’s sales of foreign exchange to authorized dealers indirectly extracted roughly TT$500 million.

The CBTT said that private sector credit growth remained sluggish in September 2016, as lending to businesses declined for the fourth consecutive month when compared with similar months in 2015.

In August and September, business lending registered year-on-year declines of 2.8 per cent and 1.9 per cent, respectively. Credit to the private sector by the consolidated financial sector rose to 3.5 per cent in September 2016 from 3.1 per cent in August.

central-bank-of-ttAs at November 14, 2016, yield differentials between Trinidad and Tobago and the United States 91-day and 10-year Treasury securities stood at 65 basis points and 216 basis points, respectively compared with 86 basis points and 255 basis points, respectively at the end of October 2016.

The CBTT said that since its last Monetary Policy Announcement in September, 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,” the CBTT reported,

It said that 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

Overall price pressures remained well contained up to September 2016. According to the CSO’s Index of Retail Prices (RPI), headline inflation slowed slightly to 3.0 per cent on a year on-year basis in September 2016 from 3.1 per cent in August.

Core inflation, which excludes food prices, edged upwards to 2.3 per cent in September 2016 from 2.2 per cent in August. Faster price increases within the health and clothing and footwear sub-indices led the pickup in core inflation. Conversely, food inflation slowed to 6.2 per cent by September 2016 compared with 7.2 per cent in August.

Meanwhile, the CBTT said there is a growing consensus among global financial analysts that the United States Federal Reserve will increase interest rates in the near future.

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