Oct 2005 Financial News

Repo steady at 5.75 per cent

Oct 21, 2005

The Central Bank will maintain the “Repo” rate at 5.75 per cent. The latest statistics released by the Central Statistical Office indicate a slight deceleration in the rate of inflation on a year-on-year basis to September. Headline inflation measured 6.9 per cent year-on-year in September 2005, slightly down from the 7.3 per cent figure reported in August 2005.

Food prices registered a year-on-year increase of 23 per cent, slightly below the increase of 25 per cent recorded for August. Core inflation held steady at 2.6 per cent.

Since the beginning of 2005, the Central Bank has started a shift to a less accommodating monetary stance. During the year, the bank increased its policy interest rate or “Repo” on three occasions from five per cent to 5.75 per cent.

Correspondingly, the commercial banks’ prime lending rates have increased from 8.75 per cent to 9.50 per cent. Money market rates, as well as long-term interest rates have also increased markedly over the period. While there continue to be signs of strong underlying inflationary pressures, the Central Bank would like to assess the impact of the past changes before taking further action.

The evolution of monetary policy over the next several months would need to take into account: the fiscal stance envisaged by the 2006 Budget; the developments in the foreign exchange market; other factors, such as developments in incomes policy and food prices.

The bank will continue to monitor developments in the external and domestic markets and will keep monetary conditions under close review.

The next “Repo” announcement is scheduled for November 25.


The Trinidad Guardian
Friday, 21st October, 2005.
http://www.guardian.co.tt/business3.html