For a second time in five weeks, two commercial banks have reduced their prime lending rates. First Citizens Bank has reduced its rate to 11.50 per cent from 11.75 per cent effective August 1 and Scotiabank's prime went down to 11.75 per cent from 12 per cent, effective August 3.
The latest reduction in prime came after the Central Bank announced on July 24, a reduction in its repo rate from 7.50 per cent to 7.25.
The repo rate is the rate at which Central Bank is prepared to provide overnight financing to commercial banks who are unable to meet their liquidity needs. In June, the Central Bank had reduced the repo rate by 50 basis points from 8.00 per cent to 7.50 per cent.
As a result, four commercial banks reduced their prime lending rate.
Republic Bank's prime went down to 11 per cent. First Citizens' rate went down to 11.75 per cent. FirstCaribbean International Bank slashed its rate to 11.75 per cent. And RBTT lowered its rate to 12 per cent.
This time around, Republic Bank has stated that it will not be reducing its prime lending rate from its present position of 11 per cent. In response to the banks' first reduction in prime, the T&T Manufacturers Association (TTMA) issued a statement saying their lowering of lending rates was a move in the right direction.
The reduced rates will boost the economy, the business body said in a statement. "The TTMA views the move to lower lending rates as a step in the right direction, and one if sustained, is likely to provide much needed stimulus to this country's economy, which is being affected by the global economic downturn," read the statement.
The TTMA said steps should be taken to address rates on the banking tools that most manufacturers use, such as bankers' acceptances, promissory notes and long-term mortgages, since it has not been reduced in accordance with the headline numbers that were announced.
TTMA president Greig Laughliin said manufacturers should recognise and take advantage of the opportunities that lie in the global economic downturn.