The Central Bank sending up the repo rate sent the signal
to banks to increase their prime lending rates, said economist
Sarjeant was commenting on published notices by FCB and Republic
Bank that their prime lending rate had been increased to nine
Sarjeant said given that there existed a falling interest
rate environment, the demand for residential and commercial
loans also went up.
of those things contributed a little to an inflation situation
we saw happening, Sarjeant said.
seems to me we are moving away from a falling interest rate
environment to one where the interest rate will start to increase
slowly, Sarjeant said.
He said he expects the overall prime lending rate to settle
between 9.75 and 9.80 per cent.
While FCB and Republic Bank have upped their prime lending
rates, RBTTs commercial lending rate has also gone up
to nine per cent.
TTMA president Paul Quesnel said RBTTs increase in its
TT dollar commercial lending rate will have the effect of
adding to the cost of doing business.
Quesnel said RBTTs adjustment of its commercial lending
rate is as a result of Central Bank raising the repo rate
to 5.25 per cent.
The repo rate had been five per cent since September 2003.
The repo rate is the rate at which banks borrow overnight
from the Central Bank.
Quesnel said businesses are already faced with increased shipping
rates and other costs associated with inefficiencies.
now faced with the additional cost of borrowing, Quesnel
said. Many of our businesses have to borrow money to
stay operational. Its also going to affect our competitiveness
and goods are going to cost more if we are to export more.
Quesnel said if theres excess liquidity in the system,
Central Bank increases the repo rate to keep the exchange
rate at $6.30 to US$1.
theres a lot of money floating around, people tend to
buy commoditiesa new living-room set, a new fridgethings
they normally wouldnt buy if things were tight,
a matter of Central Bank trying to keep things under control,
Quesnel said. One has to balance the cost of doing business
Chamber president Christian Mouttet said given that the US
interest rate has moved up, its no surprise local rates
the US interest rates moving up and moving into a higher inflation
environment, its no surprise that Central Bank has moved
the repo rate, Mouttet said.
reality is that we are moving into a higher inflationary period
and US rates are moving up, he said.