Inflation under control in TT
OVERALL INFLATION in Trinidad and Tobago remains under control at 2.7 percent. In its latest release, the Central Bank of TT said this was the case in spite of the fact that headline inflation in July was 7.3 percent as compared to 3.3 percent for the same period last year. The Central Bank also said the repo rate was being maintained at 5.5 percent. The bank attributed this increase to a recent surge in food prices that was aggravated by recent floods and increases in a range of other components of the Retail Prices Index. The bank said rising interest rates in the US have caused a narrowing in the spread between US and TT dollar short-term interest rates. As at end of July 2005, the spread was 1.5 percent, compared to 3.3 percent one year earlier. Net fiscal injections remain high, boosting liquidity in the financial system. Pressures in the foreign exchange market persist related to large capital transactions, the liquidity overhang and the declining interest rate spreads. The bank is addressing the liquidity and foreign exchange challenges through open market operations and foreign exchange sales. Commercial banks have recently adjusted their prime lending rates from 9.00 percent to 9.25 percent. The bank said the effects of these changes would be monitored "as they work their way through the system." The bank will continue to keep monetary conditions under close review. The next repo rate announcement is scheduled for September 23.
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"Inflation under control in TT"