ECCB
ANNUAL REPORT 2014/2015
9
EASTERN CARIBBEAN CENTRAL BANK
statutory and operational limits of 60.0 per cent and
80.0 per cent respectively. The fixed exchange rate
contributed to low and stable inflation, providing
an enabling environment for sustainable growth and
development. Consumer prices rose by 1.5 per cent
during 2014, compared to a decline of 0.2 per cent
in the previous year. Real Gross Domestic Product
(GDP) is provisionally estimated to have risen by 1.3
per cent, up from 1.1 per cent in 2013. The growth
outturn for 2014 reflected positive contributions from
hotels and restaurants, transport and storage, and the
agriculture, livestock and forestry sectors (Chart I).
Chart I
The stock of broad money expanded by 5.9 per cent
during 2014, compared with an increase of 4.7 per cent
during the previous year. In contrast, domestic credit
declined by 6.5 per cent, reflecting in part a tightening
of lending terms and conditions by commercial banks,
loan write-offs, elevated credit and market risks, and
the slow pace of the economic recovery (Chart II).
Chart II
The divergence between money and credit aggregates
remained a central policy concern in monetary policy
assessments. The focal point of discussion was the
efficacy of utilising the Bank’s traditional monetary
policy tools, such as the minimum savings rate, the
reserve requirement and the discount rate to leverage
available financial resources to fund economic growth
and development. In that regard, the Monetary
Council, at its 81
st
Meeting on 24 February 2015,
reduced the Minimum Savings Rate from 3.0 to 2.0
per cent. It is anticipated that the reduction, supported
by moral suasion, will encourage commercial banks to
increase the availability of credit to ECCU firms and
households, thus relaxing the credit constraint. The
Bank’s discount rate was maintained at 6.5 per cent.
The forecasted improvement in economic activity
in the countries of the main trading partners of the
ECCU in 2015 and 2016 is expected to result in an
increase in trade and financial flows, easing monetary
and credit conditions and supporting an expansion in
domestic activity.
