Macroeconomic Forecast Trinidad & Tobago

The Central Bank of Trinidad & Tobago (CBTT) cut the country's repo rate by 50bps to 7.50% in June, bringing cumulative monetary easing to 125bps since March. The move came on the back of a positive inflation surprise, with the retail price index showing month-on-month contraction of 0.2% in May (taking the year-on-year rate down to 10.3%, from 11.9% in April). We still see scope for another 50bps cut before the easing cycle comes to a halt. Meanwhile, deflationary trends should kick in the second half of the year, suggesting to us that headline inflation could fall towards our out-of-consensus end-2009 target of 4.0%.

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