PORT OF SPAIN, Trinidad – The Central Bank of Trinidad and Tobago (CBTT) has identified escalating geopolitical tensions between the United States and Venezuela as a significant factor contributing to mounting economic uncertainty in the domestic economy. This assessment was detailed in the bank’s year-end Monetary Policy Statement released Wednesday, December 31, 2025.
While acknowledging that inflation remains well-contained, credit growth reasonable, and liquidity conditions improved, the CBTT characterized the nation’s economic recovery as ‘somewhat tentative.’ The bank reported that gains from increased energy production in Q2 2025, driven by two new natural gas fields (bpTT’s Cypre and bpTT/EOG’s Mento fields), were partially undermined by a non-energy sector showing signs of deceleration across multiple sub-sectors.
Energy sector output surged 10.4% year-on-year, with natural gas production increasing 11.7% and crude oil output rising 8.9%. The petrochemical industry demonstrated mixed results with ammonia production expanding 23.6% and urea output jumping 51.3%, while methanol production continued its decline with a 12.7% contraction.
The Central Bank noted concerning softness in distribution, construction, and manufacturing sectors, though these were partially counterbalanced by improvements in finance and utilities. Inflation metrics remained favorable, with headline inflation measured at 0.5% in November 2025 compared to 1.5% in June. Core inflation (excluding food prices) rose moderately by 0.5%, while food inflation decelerated to 0.8% due to lower international food prices and minimal weather-related disruptions to domestic agricultural supplies.
Financial conditions presented a nuanced picture: system liquidity constraints eased substantially with commercial banks’ excess reserves at the Central Bank climbing from TT$3.5 billion in October to TT$5.3 billion by mid-December. Conversely, private sector credit expansion slowed to 6.3% year-on-year in October from 8.6% in June, primarily influenced by more modest business credit growth.
The Monetary Policy Committee (MPC) decided to maintain the repo rate at 3.50%, citing softness in the non-energy sector, low inflation environment, and narrowing interest rate differentials with the United States. The bank emphasized that safeguarding international reserves remains paramount given the country’s high import propensity, with foreign reserves strengthening from US$4.6 billion in October to US$5.3 billion as of December 19, 2025.
The MPC committed to actively monitor the effects of recent wage adjustments on aggregate demand and import growth in coming months, standing ready to implement necessary monetary policy actions to balance foreign reserve protection with maintaining favorable funding conditions for domestic economic activity.