ECCB 2022-2023 Annual Report and Financial Statements

Eastern Caribbean Central Bank Annual Report 2022 - 2023

economy and forecasts a global growth rate of 2.8 per cent for 2023. The ECCU economy is projected to grow at a decelerated rate of 5.0 per cent in 2023. One of the most challenging aspects of the current crisis environment has been persistently high inflation across the globe. The inflation situation has been created by a confluence of factors, including demand and supply conditions as economies emerged from the pandemic and the impact of the war in Ukraine on some commodity prices. High inflation has been pernicious, eroding households’ purchasing power and placing the most vulnerable at further risk.

stability. The bank failures in the US regional banking sector sparked widespread concerns leading to unprecedented guarantees by the depositor insurer to preserve confidence and financial stability. Separately, cracks emerged in some parts of the financial sector with the “crypto winter” in late 2022 seeing a downturn and collapses in the crypto space. Against the backdrop of these external developments and pressures, the Central Bank reports that the EC dollar remains strong and stable with a backing ratio around 92.0 per cent, well above the legal requirement of 60.0 per cent.

According to the Food and Agriculture Organization’s Food Price Index, food prices skyrocketed in 2022. While those prices have since receded from their highs, they remain elevated by historical

The Big Push is a call to implement innovative and transformative policies and initiatives to double the size of the ECCU economy for the benefit of the people of the region.

The Bank recorded a second consecutive year of loss, to the tune of EC$55 million, because of the impact of aggressive rate hikes by the US Federal

standards. The index fell to 121.6 at the end of March 2023, from 156.3 a year earlier. ECCU member governments’ support to residents in this environment has been vital for cushioning the worst impacts of the cost-of-living crisis. The daunting task of subduing inflation - which had climbed to a 40-year high of 9.1 per cent in the United States in June 2022 - kept the major central banks occupied over the past year. The US Federal Reserve Bank’s aggressive tightening cycle came swiftly upon the realization that inflation had become entrenched and was not, in fact, transitory as had been previously diagnosed. During the course of the ECCB’s 2022-2023 financial year, the Fed implemented eight consecutive interest rate hikes, including an unprecedented four successive hikes of 75 basis points each - a sure sign of the fraught times for monetary policy.

Reserve. That said, the ECCB will return to strong profitability in 2023/2024 on account of the slowdown or cessation of rate hikes by the US Fed and elevated interest rates during the financial year. In this, our 40 th year, the Central Bank has launched a year-long calendar of activities under the theme: ECCB @ 40: A Year of Reflection, Celebration and Implementation . The Bank reflects on its achievements over the past four decades and celebrates all those who have contributed to its work – past and current. Even so, we are mindful not to rest on our laurels, for the needs of the region remain great. At the heart of these celebrations is a campaign for A Big Push in the region. The Big Push is a call to implement innovative and transformative policies and initiatives to double the size of the ECCU economy for the benefit of the people of the region. The Bank’s role in the Push agenda encompasses advocacy, advice and action , guided by the focus areas of the 2022 - 2026 Strategic Plan .

Adding to the complexity of the policy environment was the spillover of Fed policy into banking sector

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