PORT OF SPAIN, Trinidad (CMC) – The  Central Bank of Trinidad and Tobago (CBTT)  says domestically, the fluid geopolitical tension between the United States and Venezuela is contributing to building economic uncertainty.

“Nonetheless, inflation is well contained, credit growth is still reasonable, and liquidity conditions have improved. However, economic growth is somewhat tentative,” the CBTT said in its Monetary Policy statement issued on Wednesday, the last working day in 2025.

It said that 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,” the CBTT warned.

According to the policy statement, domestically, a boost to natural gas production in the second quarter of 2025, with first gas from bpTT’s Cypre and bpTT/EOG’s Mento fields, underpinned a resurgence in energy sector output 10.4 per cent year-on-year.

According to data from the Ministry of Energy and Energy Industries for the second quarter of 2025, the production of natural gas rose by 11.7 per cent year-on-year, while crude oil production increased by 8.9 per cent.

The petrochemical industry recorded expansions in ammonia (23.6 per cent) and urea (51.3 per cent), while methanol output continued to decline (-12.7 per cent). Meanwhile, the slowdown in non-energy sector activity is estimated to have persisted during the second quarter of 2025.

“Indicators monitored by the Central Bank suggest softer performances for the distribution, construction and manufacturing sectors, which countered gains in the finance and utilities sectors.”

The CBTT said that domestic inflation has held firm at the lower end of single digits during the second half of 2025 and that headline inflation, as measured by the Central Statistical Office’s (CSO) Consumer Price Index, measured 0.5 per cent in November 2025 compared with 1.5 per cent in June 2025.

It said core inflation, which excludes food prices,  rose by 0.5 per cent while food inflation decelerated to 0.8 per cent, pulled down by lower international food prices and few weather related disruptions to domestic agricultural supplies. Building material price increases slowed to 1.5 per cent year-on-year during the third quarter of 2025 compared with 2.2 per cent the previous quarter.

The CBTT said  that domestic financial conditions are finely balanced. It said system liquidity constraints have eased in recent months, despite continued government borrowing activity and notable upticks in interbank and repo market activity.

“After declining to TT$3.5 billion in October 2025, commercial banks’ excess reserves at the Central Bank averaged TT$4.4 billion in November 2025, and rose further to TT$5.3 billion by mid-December 2025.

“Conversely, the pace of private sector credit expansion has slowed. Private sector credit rose by 6.3 per cent year-on-year in October 2025, down from growth of 8.6 per cent in June 2025.

The CBTT said that the slowdown was primarily influenced by more modest business credit growth (6.6 per cent in October compared with 11.8 per cent in June 2025). Consumer lending growth slowed to eight per cent from 9.7 per cent over the same period, driven by lower loan demand for credit cards, motor vehicles and bridging finance. Real estate mortgage loans increased by 5.8 per cent.

The  CBTT said that its Monetary Policy Committee (MPC) has noted that global inflationary pressures have fared much better, though not fully contained, than initial expectations when the US reciprocal tariff regime was first announced in April 2025.

The MPC also considered that aggregate demand may increase as household incomes are perched to receive a boost in the coming months.

“Against this backdrop, given Trinidad and Tobago’s high propensity to import, safeguarding the country’s international reserves becomes paramount. Trinidad and Tobago’s foreign reserves stabilised in recent months, moving from US$4.6 billion in October 2025 to US$5.3 billion as at December 19, 2025. However, conventional international indicators of reserve adequacy suggest close monitoring is warranted,”  the CBTT said.

It said given the softness in the non-energy sector, reflected in part by slowing business credit growth, and in the context of low inflation and the narrowing of the 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 MPC is prepared to take the necessary monetary policy actions to maintain a prudent balance between safeguarding the foreign reserves and fostering favourable funding conditions supportive of domestic economic activity,” the CBTT said in its policy statement.