Central Bank of T&T Repo Rate to Stay at 3.5%

• The Central Bank of Trinidad and Tobago (CBTT) has maintained its policy repo rate at 3.5%, citing well-contained inflation, improving liquidity conditions, and lingering weakness in the non-energy sector. In its Monetary Policy Committee announcement, the Bank said the decision was taken against a backdrop of modest global economic prospects and tentative domestic growth.
• 'Global economic prospects remain modest as persistent geopolitical tensions and trade policy uncertainty dampen economic activity,' the Committee noted. It also pointed to the International Monetary Fund's October 2025 World Economic Outlook, which projected world output growth of 3.2% in 2025, marginally lower than the 3.3% recorded in 2024.
• The Committee stated that while economic growth in the United States (U.S.) has shown resilience despite labour market challenges and above-target inflation, the Central Bank said other major economies continue to face softer growth alongside stubbornly elevated inflation. International energy prices, which the Bank described as a barometer of global economic conditions, have also softened in recent months.
• Globally, monetary policy has shifted towards easing, with central banks placing greater emphasis on supporting economic growth. The CBTT highlighted that several monetary authorities reduced policy rates between October and December 2025.
• In particular, the US Federal Reserve lowered its federal funds target range by 0.25% to 3.50–3.75% in December and announced the commencement of buy-backs of short-term government bonds amounting to US$40Bn per month to support market liquidity. As a result, short-term US treasury yields softened, while interest rates on T&T three-month treasuries firmed. This narrowed the negative T&T–U.S. interest rate differential on three-month treasuries to -74 basis points as of December 26, 2025, from -230 basis points in July 2025.
• That said, the Committee acknowledged rising uncertainty stemming from geopolitical tensions between the United States and neighbouring Venezuela, but noted that inflation remains low and liquidity conditions have improved. 'However, economic growth is somewhat tentative. The positive effect of higher energy production in the second quarter of 2025, driven by two new natural gas fields, may be partially offset by a non-energy sector that is losing momentum across several sub-sectors. This suggests that the domestic economy is still in need of support to engender a sustained recovery,' it stated.
• The report also highlighted the importance of safeguarding the country's foreign reserves, given T&T's high import dependence. Foreign reserves rose from US$4.6Bn in October 2025 to US$5.3Bn as of December 19, 2025, although the Bank cautioned that conventional indicators of reserve adequacy warrant close monitoring.

(Source: Trinidad Express Newspaper)