A slight slow­down in head­line in­fla­tion to 3 per cent was among the in­di­ca­tors high­light­ed by the Cen­tral bank in its lat­est Mon­e­tary Pol­i­cy An­nounce­ment re­leased yes­ter­day.

The bank, cit­ing da­ta from the Cen­tral Sta­tis­ti­cal Of­fice (CSO), said price pres­sures re­mained well con­tained up to Sep­tem­ber.

"Core in­fla­tion, which ex­cludes food prices, edged up­wards to 2.3 per cent in Sep­tem­ber 2016 from 2.2 per cent in Au­gust. Faster price in­creas­es with­in the health and cloth­ing and footwear sub-in­dices led the pick­up in core in­fla­tion," the re­port stat­ed.

"Con­verse­ly, food in­fla­tion slowed to 6.2 per cent by Sep­tem­ber 2016 com­pared with 7.2 per cent in Au­gust." The Cen­tral Bank said since the last Mon­e­tary Pol­i­cy An­nounce­ment in Sep­tem­ber, oil prices had ral­lied to a 15-month high of near US$50 a bar­rel for West Texas In­ter­me­di­ate (WTI) crude in Oc­to­ber, but have de­clined since.

"Though oil prices gen­er­al­ly re­mained low, they im­proved in the third quar­ter of 2016 and av­er­aged US$44.9 com­pared to US$39.4 in the first half of the year. Mean­while, pro­duc­tion of crude oil and nat­ur­al gas, as well as some down­stream prod­ucts, con­tin­ued to be af­fect­ed by main­te­nance and oth­er stop­pages by en­er­gy com­pa­nies, lead­ing to cur­tailed en­er­gy sec­tor out­put rel­a­tive to the first three quar­ters of 2015," the Cen­tral Bank said.

At the same time, ear­ly in­di­ca­tors of non-en­er­gy sec­tor ac­tiv­i­ty in the third quar­ter sug­gest on-go­ing soft­en­ing with­in the con­struc­tion and dis­tri­b­u­tion sec­tors. "The lat­est labour force in­for­ma­tion from the Cen­tral Sta­tis­ti­cal Of­fice (CSO) put the un­em­ploy­ment rate at 4.4 per cent dur­ing the sec­ond quar­ter of 2016 com­pared with 3.2 per cent in the cor­re­spond­ing quar­ter of 2015."

The bank said af­ter falling in Oc­to­ber, liq­uid­i­ty in the fi­nan­cial sys­tem rose slight­ly this month and com­mer­cial banks' ex­cess re­serves av­er­aged $3.4 bil­lion dai­ly dur­ing the pe­ri­od No­vem­ber 1 to 21.

The re­port con­tin­ued: "The Cen­tral Bank re­moved $725 mil­lion from the sys­tem through open mar­ket op­er­a­tions while the bank's sales of for­eign ex­change to au­tho­rised deal­ers in­di­rect­ly ex­tract­ed rough­ly $500 mil­lion."

The bank re­port­ed slug­gish pri­vate sec­tor cred­it growth in Sep­tem­ber–the fourth con­sec­u­tive month of de­cline in lend­ing to busi­ness­es com­pared with the cor­re­spond­ing months last year.

"In Au­gust and Sep­tem­ber, busi­ness lend­ing reg­is­tered year-on-year de­clines of 2.8 per cent and 1.9 per cent, re­spec­tive­ly. Cred­it to the pri­vate sec­tor by the con­sol­i­dat­ed fi­nan­cial sec­tor rose to 3.5 per cent in Sep­tem­ber 2016 from 3.1 per cent in Au­gust," the bank said.

"As at No­vem­ber 14, 2016, yield dif­fer­en­tials be­tween TT and US 91-day and 10-year Trea­sury se­cu­ri­ties stood at 65 ba­sis points and 216 ba­sis points, re­spec­tive­ly com­pared with 86 ba­sis points and 255 ba­sis points, re­spec­tive­ly at the end of Oc­to­ber 2016. Mean­while, there is a grow­ing con­sen­sus among glob­al fi­nan­cial an­a­lysts that the Unit­ed States Fed­er­al Re­serve will in­crease in­ter­est rates in the near fu­ture."

The bank's Mon­e­tary Pol­i­cy Com­mit­tee took note of over­all eco­nom­ic con­di­tions, the weak in­fla­tion­ary pres­sures and cur­rent and an­tic­i­pat­ed tra­jec­to­ry of ex­ter­nal in­ter­est rates and de­cid­ed to main­tain the "Re­po" rate at 4.75 per cent.

The next Mon­e­tary Pol­i­cy An­nounce­ment is sched­uled for Jan­u­ary 27, 2017.