An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

The Cen­tral Bank’s May 2026 Mon­e­tary Pol­i­cy Re­port sug­gests that the T&T econ­o­my is en­ter­ing a pe­ri­od of mod­er­a­tion as high­er in­ter­est rates, tighter fi­nan­cial con­di­tions and eco­nom­ic un­cer­tain­ty be­gin to in­flu­ence bor­row­ing and spend­ing de­ci­sions.

The re­port shows slow­er growth across sev­er­al key cat­e­gories of lend­ing, in­clud­ing con­sumer loans, busi­ness cred­it, and mort­gages. For­eign cur­ren­cy lend­ing has al­so turned neg­a­tive, while growth in mon­e­tary ag­gre­gates con­tin­ues to nar­row.

While the Cen­tral Bank re­port does not point to se­vere eco­nom­ic stress, it does re­veal an econ­o­my be­com­ing in­creas­ing­ly cau­tious. House­holds are bor­row­ing less, busi­ness­es are be­com­ing more se­lec­tive with in­vest­ment de­ci­sions, and in­vestors are repo­si­tion­ing port­fo­lios in re­sponse to chang­ing mar­ket con­di­tions.

Con­sumers pull back

The Cen­tral Bank’s May 2026 Mon­e­tary Pol­i­cy Re­port said con­sumer lend­ing slowed sig­nif­i­cant­ly be­tween Oc­to­ber 2025 and March 2026, re­flect­ing what the re­port de­scribed as a mod­er­a­tion in over­all con­sumer loan ac­tiv­i­ty.

Con­sumer loans grew by 5.2 per cent in March 2026, down from 8.0 per cent six months ear­li­er.

The Cen­tral Bank re­port said the slow­down may have been dri­ven by “changes in labour mar­ket dy­nam­ics, high­er lend­ing rates, and broad­er macro­eco­nom­ic un­cer­tain­ty, cou­pled with the re­cent scal­ing back of card trans­ac­tion lim­its.”

The re­port showed weak­er growth across sev­er­al cat­e­gories of bor­row­ing.

Mo­tor ve­hi­cle lend­ing slowed from 10.2 per cent to 9.0 per cent, while debt con­sol­i­da­tion loans eased from 5.8 per cent to 4.0 per cent. Re­fi­nanc­ing ac­tiv­i­ty al­so weak­ened, falling from 2.2 per cent to 1.4 per cent.

The Cen­tral Bank re­port said these cat­e­gories "con­tributed to the slow­down in con­sumer lend­ing" dur­ing the pe­ri­od.

Home im­prove­ment and ren­o­va­tion fi­nanc­ing de­te­ri­o­rat­ed fur­ther. The re­port said the cat­e­go­ry "de­clined from -0.8 per cent to -1.9 per cent" be­tween De­cem­ber 2025 and March 2026, sug­gest­ing house­holds may be post­pon­ing dis­cre­tionary spend­ing projects.

One no­table ex­cep­tion was land and re­al es­tate lend­ing. The Cen­tral Bank re­port said, “Land and re­al es­tate ex­pand­ed from 21.5 per cent to 22.2 per cent,” mak­ing it one of the strongest-per­form­ing seg­ments of con­sumer cred­it de­spite the broad­er slow­down.

Tak­en to­geth­er, the fig­ures in the Cen­tral Bank re­port point to con­sumers be­com­ing more se­lec­tive about bor­row­ing, even as de­mand for prop­er­ty-re­lat­ed fi­nanc­ing con­tin­ues to show re­silience.

Busi­ness bor­row­ing slows

The Cen­tral Bank al­so re­port­ed weak­er growth in lend­ing to busi­ness­es.

Busi­ness cred­it ex­pand­ed by 3.7 per cent in March 2026, down from 6.6 per cent in Oc­to­ber 2025.

The Cen­tral Bank re­port said, "De­vel­op­ments in eco­nom­ic ac­tiv­i­ty, shifts in op­er­at­ing costs, and height­ened mar­ket un­cer­tain­ty like­ly shaped cor­po­rate fi­nanc­ing de­ci­sions."

Com­mer­cial bank lend­ing ac­count­ed for much of the slow­down. The Cen­tral Bank’s sec­toral analy­sis showed dis­tri­b­u­tion lend­ing slow­ing from 5.8 per cent to 3.7 per cent, while man­u­fac­tur­ing lend­ing weak­ened from 4.3 per cent to 1.9 per cent.

The re­port said this de­cel­er­a­tion was “over­shad­owed by an uptick in lend­ing” to sev­er­al sec­tors.

“Con­struc­tion lend­ing ac­cel­er­at­ed sharply from 4.4 per cent to 12.5 per cent. Fi­nance, in­sur­ance, and re­al es­tate lend­ing in­creased from 15.2 per cent to 16.3 per cent, while lend­ing to oth­er ser­vices al­so im­proved from 3.0 per cent to 3.9 per cent,” The Cen­tral Bank re­port said.

The Cen­tral Bank re­port sug­gests that while busi­ness­es re­main will­ing to bor­row, in­vest­ment ac­tiv­i­ty is be­com­ing in­creas­ing­ly con­cen­trat­ed in se­lect­ed sec­tors.

Mort­gage de­mand soft­ens

The Cen­tral Bank re­port al­so high­light­ed the im­pact of high­er in­ter­est rates on the mort­gage mar­ket.

Re­al es­tate mort­gage lend­ing grew by 4.4 per cent for the six months end­ed March 2026 com­pared with 5.8 per cent in Oc­to­ber 2025.

The re­port linked the slow­down to ris­ing mort­gage costs.

In­ter­est rates on new com­mer­cial bank mort­gages in­creased from 4.84 per cent in March 2025 to 5.23 per cent by De­cem­ber 2025.

The Mort­gage Mar­ket Ref­er­ence Rate al­so in­creased from 3.0 per cent to 3.5 per cent by the end of 2025.

Res­i­den­tial mort­gage lend­ing re­mained rel­a­tive­ly re­silient, grow­ing by 5.8 per cent.

Com­mer­cial mort­gage lend­ing was con­sid­er­ably weak­er at 1.8 per cent.

One of the more in­ter­est­ing find­ings in the Cen­tral Bank re­port was the growth in non-bank mort­gage lend­ing, which surged from 8.8 per cent to 17.78 per cent over the same pe­ri­od. The fig­ures sug­gest some bor­row­ers may be in­creas­ing­ly turn­ing to al­ter­na­tive lenders as bor­row­ing con­di­tions evolve.

For­eign cur­ren­cy cred­it con­tracts

Among the most sig­nif­i­cant find­ings in the Cen­tral Bank re­port was the re­ver­sal in for­eign cur­ren­cy lend­ing.

For­eign cur­ren­cy cred­it con­tract­ed by 1.3 per cent in March 2026 af­ter grow­ing by 8.7 per cent in Oc­to­ber 2025.

The re­port at­trib­uted the de­cline to weak­er lend­ing by both com­mer­cial banks and non-bank fi­nan­cial in­sti­tu­tions.

At the same time, for­eign cur­ren­cy de­posits con­tin­ued to grow.

The Cen­tral Bank re­port­ed growth of 7.9 per cent in for­eign cur­ren­cy de­posits, up from 6.5 per cent in Oc­to­ber 2025.

Busi­ness de­posits in­creased from 6.9 per cent to 8.9 per cent, while con­sumer de­posits fell from pos­i­tive growth of 10 per cent to neg­a­tive 1.3 per cent.

The da­ta points to busi­ness­es ac­cu­mu­lat­ing for­eign cur­ren­cy bal­ances while house­holds draw down sav­ings.

Mon­ey growth weak­ens

The Cen­tral Bank’s broad­er mon­e­tary in­di­ca­tors al­so point to slow­er ac­tiv­i­ty.

The re­port showed M1-A, which in­cludes cur­ren­cy in cir­cu­la­tion and de­mand de­posits, de­clin­ing by 2.1 per cent in March 2026, com­pared with a de­cline of 0.7 per cent in Oc­to­ber 2025.

De­mand de­posits fell by 3.0 per cent while cur­ren­cy in cir­cu­la­tion grew by 3.1 per cent.

The re­port al­so showed M2 growth slow­ing to 0.9 per cent.

Mean­while, time de­posits ex­pand­ed by 16.5 per cent as house­holds and busi­ness­es took ad­van­tage of high­er in­ter­est rates.

The Cen­tral Bank da­ta sug­gests more mon­ey is be­ing placed in longer-term sav­ings in­stru­ments and less is cir­cu­lat­ing through the econ­o­my.

Debt mar­ket slows

The Cen­tral Bank re­port found that ac­tiv­i­ty in the pri­ma­ry debt mar­ket re­mained sub­dued be­tween Oc­to­ber 2025 and April 2026.

On­ly three do­mes­tic bond is­sues came to mar­ket, rais­ing a com­bined $2.3 bil­lion. All were Gov­ern­ment is­sues.

Dur­ing the same pe­ri­od one year ear­li­er, eight is­sues raised more than $8.4 bil­lion.

The gov­ern­ment al­so is­sued a US$1 bil­lion in­ter­na­tion­al bond for re­fi­nanc­ing and bud­get sup­port.

While new is­suance slowed, the Cen­tral Bank re­port­ed stronger ac­tiv­i­ty in the sec­ondary mar­ket as in­vestors trad­ed ex­ist­ing Gov­ern­ment and cor­po­rate bonds more ac­tive­ly.

Stocks pro­vide a bright spot

One of the more en­cour­ag­ing find­ings in the Cen­tral Bank re­port came from the stock mar­ket.

The Com­pos­ite Price In­dex rose 2.1 per cent over the five months end­ing April 2026, in­creas­ing to­tal mar­ket cap­i­tal­i­sa­tion to $93.5 bil­lion.

The re­port showed gains in the All T&T In­dex and the Cross List­ed In­dex, sup­port­ed by stronger earn­ings across sev­er­al sec­tors.

En­er­gy stocks record­ed the strongest per­for­mance, while prop­er­ty, non-bank fi­nan­cial, and bank­ing shares al­so ad­vanced.

How­ev­er, the Cen­tral Bank re­port not­ed de­clines in trad­ing, man­u­fac­tur­ing, and con­glom­er­ate stocks, while the SME mar­ket con­tin­ued to con­tract.

Im­pact of Iran war

The Cen­tral Bank re­port al­so looked at the vul­ner­a­bil­i­ty of the T&T econ­o­my to the war in the Mid­dle East in­volv­ing Is­rael, US and Iran. The re­port said that for a small, open, en­er­gy-ex­porter with a heavy re­liance on im­ports, T&T faces vul­ner­a­bil­i­ties to the con­flict through sev­er­al chan­nels, in­clud­ing rais­ing im­port and trans­port costs, a falloff in tourism de­mand, and a slow­down in eco­nom­ic growth.

In terms of en­er­gy, ac­cord­ing to the Cen­tral Bank, a pro­longed war could af­fect the do­mes­tic econ­o­my on two fronts: High­er prices for hy­dro­car­bon prod­ucts could re­sult in in­creased en­er­gy ex­port earn­ings, while a cor­re­spond­ing pick­up in prices for re­fined prod­ucts could raise spend­ing on im­ports.

“Whether the im­pact of this oc­cur­rence is pos­i­tive or neg­a­tive for the lo­cal econ­o­my de­pends on the di­rec­tion and mag­ni­tude of these price in­creas­es. At the same time, high­er fu­el costs will al­so make it more ex­pen­sive for air and mar­itime ser­vices, which could raise the prices for some non-en­er­gy com­modi­ties in­clud­ing food. Ad­di­tion­al­ly, a de­te­ri­o­ra­tion in glob­al eco­nom­ic con­di­tions, par­tic­u­lar­ly in key source mar­kets, could neg­a­tive­ly im­pact tourism ac­tiv­i­ty.”

The Cen­tral Bank not­ed that while T&T pos­sess­es fi­nan­cial buffers, such as its re­serves hold­ings, to safe­guard against eco­nom­ic spillovers from this cri­sis, tak­en to­geth­er, “these fac­tors have the po­ten­tial to damp­en do­mes­tic eco­nom­ic growth un­less there is a time­ly res­o­lu­tion to the con­flict.”