Press Release No. : 05/2026
Date : 26 February 2026
Press Release No 05 – RBF Maintains the Overnight Policy Rate
The Reserve Bank of Fiji (RBF) Board decided to keep the Overnight Policy Rate unchanged at 0.25 percent at its meeting on 26 February 2026. The Governor and Chairman of the Board, Mr Ariff Ali, noted that, based on the Bank’s assessment, the current level of interest rate remains appropriate. He added that the monetary policy objectives of low inflation and adequate foreign reserves remain intact, and that their outlook lies within a comfortable range.
Annual headline inflation in January 2026, as published by the Fiji Bureau of Statistics, stood at -2.5 percent, down from the 2.5 percent recorded in January last year, driven largely by the reduction in the VAT rate and lower fuel and gas prices. However, core inflation,1 which excludes volatile items like food, fuel and gas, is estimated at 0.8 percent in January, broadly unchanged from 0.9 percent a year ago. Looking ahead, headline inflation is expected to gradually rise over the course of 2026 as the base effects2 of the lower VAT adjustments and the bus fare subsidy continue to unwind. Assuming no major shocks, inflation is projected to be between 2.5 – 3.0 percent at the end of this year. Foreign reserves remain adequate at around $3.6 billion (26/02), sufficient to cover 5.3 months of retained imports of goods and services and are expected to remain adequate over the medium term.
On the domestic front, Fiji recorded 70,993 visitor arrivals in January, the highest number ever for the month. This represented a marginal 0.3 percent increase from the same period last year. Arrivals increased from Australia and New Zealand, the United States (US), Canada, the United Kingdom, India, South Korea and the Rest of Asia, although China and Pacific Islands countries and Continental Europe markets declined.
Sectoral performances were mixed over the review period. Mahogany production and electricity generation improved, while mineral water, and gold output declined. On the demand side, consumption activity remained robust throughout 2025 and into early 2026, supported by higher incomes, steady remittance inflows, and government spending. Investment momentum also strengthened, as evidenced by higher investment lending particularly for real estate and building & construction sectors. In addition, labour market conditions have improved but businesses continue to raise concerns about productivity and ongoing skills shortages. The Governor added that private sector credit expanded by 10.5 percent in January, reflecting increased lending activity. At the same time, liquidity in the banking system remained ample at $1.9 billion (25/02), keeping lending rates near historic lows and thereby supporting ongoing economic activity.
Mr Ali cautioned that both global and domestic risks factors including any rise in commodity prices arising from geopolitical uncertainty in the Middle East and the likelihood of natural disasters as we are still in the cyclone season, remain and could weigh on the 3.0 percent growth outlook for the year. The RBF will continue to closely monitor these developments, assess their implications on the outlook and will adjust monetary policy if needed, to safeguard its core mandates.
RESERVE BANK OF FIJI
For further details, please contact:
Communications Office
Telephone: (679) 3223 381 Email: info@rbf.gov.fj
Mervin Singh – Manager Corporate Communications
Telephone: (679) 3223 229 Email: mervin@rbf.gov.fj