The Central Bank of Trinidad and Tobago (CBTT) says ongoing geopolitical tensions between the United States and Venezuela are contributing to heightened economic uncertainty, even as inflation remains contained and liquidity conditions improve.
In its Monetary Policy Statement issued on Wednesday, the final working day of 2025, the CBTT noted that while key indicators remain relatively stable, economic growth is still fragile.
“Nonetheless, inflation is well contained, credit growth is still reasonable, and liquidity conditions have improved. However, economic growth is somewhat tentative,” the Bank said.
The CBTT pointed to a boost in energy sector performance during the second quarter of 2025, driven by first gas production from bpTT’s Cypre field and the bpTT/EOG-operated Mento field. This helped underpin a 10.4 per cent year-on-year increase in energy sector output.
Data from the Ministry of Energy and Energy Industries showed that natural gas production rose by 11.7 per cent year-on-year in the second quarter, while crude oil production increased by 8.9 per cent. The petrochemical sector also recorded strong gains, with ammonia production up 23.6 per cent and urea output rising by 51.3 per cent, although methanol production continued to decline by 12.7 per cent.
However, the central bank warned that gains in the energy sector are being partially offset by weakening performance in the non-energy economy.
“This suggests that the domestic economy is still in need of support to engender a sustained recovery,” the CBTT cautioned.
According to the Bank, the slowdown in non-energy sector activity persisted during the second quarter of 2025, with softer performances recorded in distribution, construction and manufacturing, outweighing gains in finance and utilities.
On inflation, the CBTT said price pressures remained at the lower end of single digits during the second half of the year. Headline inflation, as measured by the Central Statistical Office’s Consumer Price Index, stood at 0.5 per cent in November 2025, down from 1.5 per cent in June. Core inflation rose by 0.5 per cent, while food inflation slowed to 0.8 per cent, aided by lower international food prices and minimal weather-related disruptions to local agriculture. Building material prices also eased, increasing by 1.5 per cent year-on-year in the third quarter, compared with 2.2 per cent previously.
The CBTT said domestic financial conditions remain finely balanced. Liquidity constraints have eased despite continued government borrowing and increased activity in interbank and repo markets. Commercial banks’ excess reserves rose from TT$3.5 billion in October 2025 to an average of TT$4.4 billion in November, and further to TT$5.3 billion by mid-December.
At the same time, private sector credit growth has slowed. Credit to the private sector expanded by 6.3 per cent year-on-year in October 2025, down from 8.6 per cent in June. Business credit growth moderated sharply to 6.6 per cent from 11.8 per cent, while consumer lending slowed to eight per cent, reflecting reduced demand for credit cards, motor vehicle loans and bridging finance. Mortgage lending increased by 5.8 per cent.
The Bank said its Monetary Policy Committee (MPC) also assessed global conditions, noting that inflationary pressures have eased more than initially expected following the announcement of the US reciprocal tariff regime in April 2025, though risks remain. The MPC further considered that aggregate demand could strengthen in coming months as household incomes receive a boost.
Given Trinidad and Tobago’s high import dependence, the CBTT stressed the importance of protecting foreign exchange reserves. The country’s international reserves improved from US$4.6 billion in October 2025 to US$5.3 billion as of December 19, 2025, but the Bank warned that conventional indicators of reserve adequacy warrant close monitoring.
Against this backdrop, and citing low inflation, slowing non-energy activity, and a narrowing TT–US short-term interest rate differential, the MPC agreed to maintain the repo rate at 3.50 per cent.
“The MPC will actively monitor the likely effects of recent wage adjustments on aggregate demand and import growth in the coming months,” the CBTT said, adding that it stands ready to take policy action to balance foreign reserve protection with support for domestic economic activity.
