TTD$3Bn Liquidity Rise After Cut In Reserve Requirement in Trinidad And Tobago

• Following the decision in July to reduce the reserve requirement of commercial banks in Trinidad and Tobago (T&T) from 14.0% to 10.0%, T&T banking system liquidity rose by about TTD$3Bn, according to the latest Monetary Policy Announcement by the Central Bank of Trinidad and Tobago (CBTT).
• On July 24, 2024, the Monetary Policy Committee (MPC) of the CBTT reduced the primary reserve requirement for commercial banks from 14.0% to 10.0%. The MPC stated at the time of the announcement, that daily excess reserves for July had fallen by 29% compared to June. And the June figure was lower than the excess reserves for May.
• The Central Bank also noted that growth in financial system credit to the private sector has been relatively strong in recent months. Consumer lending grew by over 10% (year-on-year) between March and June 2024, with a concentration on motor vehicle loans, refinancing and debt consolidation. Meanwhile, business and real estate mortgage lending rose by a monthly average of 9.2% and 5.1% respectively between March to June 2024.
• Finally, the Central Bank stated that the continued rise in domestic interest rates on treasury bills amid the sustained public sector financing requirements and decline in external interest rates led to a narrowing of the (negative) TT/US short-term interest differential. The differential moved from -349 basis points to -271 basis points between June and mid-September 2024.

(Source: CariCris)