The Cen­tral Bank’s Mon­e­tary Pol­i­cy Com­mit­tee (MPC) has not­ed there is need for con­tin­ued mon­e­tary sup­port to­wards a do­mes­tic eco­nom­ic re­cov­ery at this time.

The MPC has al­so agreed to main­tain the re­po rate at 3.50 per cent, the bank said in its mon­e­tary pol­i­cy an­nounce­ment is­sued yes­ter­day.

The bank not­ed that the glob­al eco­nom­ic re­cov­ery is un­der way, with the In­ter­na­tion­al Mon­e­tary Fund fore­cast­ing a glob­al ex­pan­sion of 6.0 per cent for 2021.

This, it said, is dri­ven in large mea­sure by ex­pand­ed COVID-19 vac­ci­na­tion cov­er­age in ad­vanced and some emerg­ing mar­ket economies.

“How­ev­er, the prospects are quite un­even, based on the dif­fi­cul­ty of ac­cess to vac­cines faced by many low and mid­dle-in­come coun­tries, cou­pled with the grow­ing threats posed by new vari­ants of the virus,” the bank said.

It added that in gen­er­al, the sub­stan­tial fis­cal sup­port by Gov­ern­ments across the world con­tin­ues, along­side medi­um-term plans for grad­ual ex­its from such sup­port.

Like­wise, broad mon­e­tary ac­com­mo­da­tion to un­der­write eco­nom­ic re­cov­er­ies has al­so been main­tained, al­though some cen­tral banks have start­ed to, or sig­nalled the in­ten­tion to, raise in­ter­est rates to stave off loom­ing in­fla­tion, the bank said.

It al­so not­ed that de­vel­op­ments in the en­er­gy in­dus­try and pan­dem­ic-in­duced re­ac­tions by the pub­lic and pri­vate sec­tors shaped the do­mes­tic eco­nom­ic pic­ture in the first half of 2021.

The bank said the en­er­gy sec­tor’s per­for­mance was mixed: while out­put of sev­er­al prod­ucts dipped, prices of some key en­er­gy ex­ports were strong.

Avail­able da­ta show that for the first four months of 2021 rel­a­tive to the same pe­ri­od a year ear­li­er, nat­ur­al gas out­put was 20.6 per cent low­er, while crude oil pro­duc­tion rose mar­gin­al­ly by 0.6 per cent. The bank said there was al­so some de­cline in pro­duc­tion of liq­ue­fied nat­ur­al gas, nat­ur­al gas liq­uids, as well as am­mo­nia and methanol.

Mean­while, in­ter­na­tion­al en­er­gy prices have been trend­ing up­wards.

As at June 21, 2021 West Texas In­ter­me­di­ate crude oil and Hen­ry Hub nat­ur­al gas prices rose to av­er­age US$73.66 per bar­rel and US$3.15 per mmb­tu, re­spec­tive­ly.

As re­gards non-en­er­gy ac­tiv­i­ties, the bank said the ini­tial resur­gence in con­struc­tion and man­u­fac­tur­ing ob­served at the start of the year was im­ped­ed in the con­text of strin­gent na­tion­al lock­down mea­sures em­ployed in the sec­ond quar­ter to cur­tail the spread of the virus.

“In the short run, these mea­sures im­pact the pro­vi­sion of a wide range of goods and ser­vices as well as per­son­al and busi­ness in­comes.

“In this en­vi­ron­ment, head­line in­fla­tion re­mained con­tained at 1.1 per cent (year-on-year) in April 2021 ac­cord­ing to the most re­cent da­ta from the Cen­tral Sta­tis­ti­cal Of­fice,” the bank added.

It said on the fi­nan­cial front, the weight­ed av­er­age of com­mer­cial banks’ lend­ing rates fell by a fur­ther eight ba­sis points since De­cem­ber 2020 to 7.21 per cent in March 2021.

The in­ter­est dif­fer­en­tials be­tween T&T and US trea­sury se­cu­ri­ties were rel­a­tive­ly sta­ble in re­cent months, and mea­sured 30 ba­sis points for 90 day se­cu­ri­ties and 321 ba­sis points for 10-year bonds in May 2021.

The bank al­so not­ed that over the course of this year to mid-June, ex­cess liq­uid­i­ty de­clined from $10.8 bil­lion to $7.9 bil­lion, part­ly due to do­mes­tic fi­nanc­ing ac­tiv­i­ties of the Cen­tral Gov­ern­ment.

It said at the same time, pri­vate sec­tor cred­it re­mained slug­gish; in par­tic­u­lar, bank cred­it to busi­ness­es de­clined by 3.2 per cent (12-month ba­sis) in March 2021.