Page 9 - aruba-today-20221230

A9
LOCAL Friday 30 december 2022

Part 2

The CBA raised the reserve requirement by 1.0 percentage point

as of December 1, 2022

Oranjestad - In line with the Commercial bank excess
Monetary Policy Commit- liquidity
tee’s (MPC) task to evalu- Aggregated excess liquid-
ate, determine, and pro- ity fell from Afl. 1,320.5 mil-
vide transparency on the lion in December 2021 to
monetary policy actions of Afl. 791.7 million in Septem-
the Central Bank of Aruba ber 2022 (Graph 3). This
(CBA), the CBA communi- drop was principally due to
cates the following. the consecutive hikes in the
reserve requirement from
During its meeting on No- January 2022 to July 2022.
vember 22, 2022, the MPC In September 2022, excess
decided to increase the re- liquidity contracted fur-
serve requirement from 24.0 ther, albeit at a decreasing
percent to 25.0 percent pace. Furthermore, excess
as of December 1, 2022. liquidity remained above
Accordingly, commercial age points contribution), the elevated oil price on in- 2022, core inflation (ex- the pre-pandemic level of
banks must hold a minimum and the ‘food’ component ternational markets, as well cluding energy and food) February 2020 (+Afl. 102.6
balance at the CBA equal rose (1.2 percentage points as the recent hikes in utility reached 2.4 percent on a million) as well as the lev-
to 25.0 percent of their cli- contribution). tariffs. Furthermore, the ex- year-over-year basis, driv- els of liquidity needed for
ents’ short-term deposits. pectation is that Aruba will en mainly by the ‘transport’ precautionary motives. The
The decision to expand the The 12-month average in- import much of the soaring component (1.2 percent- heightened level of excess
reserve requirement to 25.0 flation amounted to 4.7 prices from its export part- age points contribution). liquidity likely resulted from
percent was based mainly percent. The CBA antici- ners, particularly the United On a twelve-month aver- the subdued credit expan-
on the diminished pace of pates increasing inflation- States and Europe. age basis, core inflation sion and the recovery in
decline in the commercial ary pressures for the re- amounted to 2.0 percent. the tourism sector.q
banks’ excess liquidity, as mainder of 2022, due to Meanwhile, in September
well as the still ample level
of excess liquidity at the
commercial banks, which
persists well above the pre-
pandemic and precaution-
ary levels.

Inflation
In September 2022, the
consumer price index (CPI)
rose by 7.0 percent com-
pared to the same month
of the previous year (Graph
2). This jump in the CPI
was caused by higher util-
ity prices, which affected
the ‘housing’ component
(2.9 percentage points
contribution). Moreover,
gasoline prices, mainly in-
fluencing the ‘transport’
component (1.6 percent-