The Central bank of Trinidad and Tobago (CBTT) on Friday said the outlook for 2023 looks favorable, barring major external shocks.
In its Monetary Police Announcement for the month of March, the CBTT said domestic inflation moderated in January and that figures released by the Central Statistical Office (CSO) showed that headline inflation decelerated to 8.3 per cent in January 2023 year-on-year compared with 8.7 per cent a month earlier.
It said food inflation remained unchanged at 17.3 per cent, with slower price increases for fish, bread and cereals. Core inflation, which excludes food items, slowed to 6.1 per cent from 6.7 per cent, as price increases eased for housing, communication and furnishings.
The CBTT said the rate of price increases for building materials also decelerated.
“In terms of economic activity in Trinidad and Tobago, latest estimates put growth in 2022 at around 2.5 per cent. This reflected a relatively favorable performance in the energy sector alongside a gradual revival in non-energy production,” the CBTT said, adding that “there is some early evidence of improving labor market conditions based on observed increases in labor force participation in the third quarter of 2022 and the decline in the number of persons retrenched during the second half of 2022.
“The outlook for 2023 looks favorable, barring major external shocks. With respect to financial indicators, liquidity remains ample and credit buoyant, while interest differentials widened,” the Central Bank said.
It said commercial banks’ excess reserves at the Central Bank fell by around TT$400 million (One TT dollar=US$0.16 cents), from TT$6.7 billion at the end of December 2022 to TT$6.2 billion at March 28, this year.
The CBTT said contributing to the decline were more extensive open market operations, including net treasury bill sales of around one billion dollars, and US$300 million in foreign exchange interventions by the Central Bank.
Financial system lending to businesses expanded by 9.8 per cent in December 2022. Credit growth to the construction and manufacturing sectors was recorded at 18 and 11 per cent respectively and “were particularly robust, while consumer credit gathered momentum”.
The CBTT said that the differential between interest rates on three-month treasures in Trinidad and Tobago and the United States moved to minus 429 basis points in February 2023.
“This compares to minus 392 basis points at the end of December 2022 in the context of US Fed tightening. There is evidence of a slight upward movement in domestic interest rates in recent months; the rise in average rates on loans exceeded those on deposits resulting in an expansion in the loan/deposit spread by five basis points to 6.36 per cent.”
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 on Friday said the outlook for 2023 looks favorable, barring major external shocks.){kind=link}