T&T Central Bank Maintains Repo Rate at 3.50% in June

• The Central Bank of Trinidad and Tobago (CBTT) held its repo rate at 3.50% at its second quarterly meeting of 2026, the level maintained since March 2020. The Bank cited low inflation, slowing credit growth, and weak domestic activity amid natural gas supply constraints, soft business confidence, and decelerating lending. Accordingly, Business Monitor International (BMI) has revised its 2026 policy-rate forecast down from 4.0% to 3.50%, as previously expected hikes now look unlikely.
• Leadership had signalled in September 2025 a need to raise rates to narrow the TT$-US$ differential and stabilise the foreign exchange (FX) market (a move the International Monetary Fund (IMF) encouraged in May). However, elevated oil prices stemming from US-Iran tensions have eased that pressure by boosting energy exports and foreign reserves, supporting the de facto peg to the US dollar.
• Domestic market interest rates have trended upward, with 1- and 10-year Treasury yields moving from 4.11% and 5.61%, respectively, in May 2025 to 4.75% and 6.03% in May 2026. However, rates are expected to move higher in 2027 as the temporary boost fades – namely, rising oil prices stemming from US-Iran tension - and reserves resume their decline.
• Inflation has stayed remarkably low, with headline inflation slowing to 0.3% y-o-y in May 2026 (down from 0.4% in April and 1.4% a year earlier). Aided by fuel price caps, falling housing and transportation costs (together 42.2% of Consumer Price Index (CPI) weight), and a strengthening TT$, that has appreciated toward TTD6.73/USD from 6.77, has helped to keep inflation contained. Food price growth eased to 0.8% following the October 2025 removal of Value Added Tax (VAT) on certain items, and core inflation rose by just 0.2%.
• BMI expects inflation to remain contained, averaging 1.0% for the year and ending at 1.5%, and forecasts the CBTT to hold the rate through year-end while continuing FX intervention to support the currency. Risks are skewed to the upside, as any reignition of US-Iran tensions and higher-for-longer oil prices could pass through into domestic prices.

(Source: BMI, A Fitch Solutions Company, NCBCM Research)