Press Release No. : 08/2026
Date : 26 March 2026
Press Release No 08 – RBF Maintains the Overnight Policy Rate
The Reserve Bank of Fiji (RBF) Board has decided to maintain the Overnight Policy Rate at 0.25 percent in March. The Governor and Chairman of the Board, Mr Ariff Ali, stated that this stance is appropriate in light of both global and domestic economic conditions. The decision reflects an ongoing balance between supporting domestic activity and meeting the RBF’s objectives of low inflation and adequate foreign reserves as well as financial stability, all of which remain within an acceptable range at this time.
While Fiji’s annual inflation remained low at the start of 2026, it rose to -0.5 percent in February from -2.5 percent in January. However, given the impact of the Middle East war on commodity prices, especially crude oil and gas prices, inflation is expected to rise sharply in the next few months. Foreign reserves are around $3.5 billion (26/03), covering 5.0 months of retained imports. The financial system continues to be sound, supported by well-capitalised banks as capital adequacy was comfortably above regulatory requirements, non‑performing loans at manageable levels and ample banking system liquidity of $1.7 billion (25/03).
In the first two months of the year, the domestic economy was supported by stronger tourism arrivals, generally positive sectoral outcomes, and steady consumption and investment activity. Consumption continued to be supported by higher incomes, employment gains, remittances and ongoing government expenditure, while investment activity strengthened further through new investment lending and easing building material prices.
Looking ahead, the balance of risks remains tilted to the downside. Global conditions have become more uncertain due to rising geopolitical tensions and elevated oil prices, with the overall impact on Fiji being heavily dependent on the breadth, magnitude, and duration of the conflict. In this case, Fiji can expect upward pressure on inflation, lower economic growth and downward pressure on foreign reserves.
On inflation, fuel and gas account for 6.9 percent of the average household budget in Fiji, meaning roughly 7 cents of every dollar spent by families goes directly to these items. Therefore, higher global prices translate into higher transport and utility costs for families. The broader impact is even larger, as fuel is a key input in transport, manufacturing, agriculture, and retail sectors, causing higher operating and freight costs for businesses that eventually pass through to consumers. Fiji experienced a similar pattern in 2022 when the global crude oil prices stayed above US$100 per barrel and annual headline inflation averaged 6.1 percent. Before the recent volatility, end of the year inflation was expected to be between 2.5 percent to 3.0 percent but this outlook has now shifted upward.
Higher input prices are likely to increase production costs and may also dampen domestic demand, which could weigh on Fiji’s overall economic activity in the near term. In addition, ongoing volatility in global fuel prices and heightened geopolitical uncertainty may affect travel sentiment and airfare costs in the coming months, potentially moderating the pace of visitor arrivals if conditions persist.
For foreign reserves, Fiji carries a large fuel import bill, accounting for close to a quarter of total imports, and most of this is retained for domestic use. A prolonged period of higher global oil prices and continued geopolitical tensions would increase the petroleum import and freight bill, widen the trade deficit, and place pressure on foreign reserves. At the same time as the economy adjusts to higher prices, demand is expected to soften, partly offsetting the downward pressure on reserves. Fiji enters this period from a position of relative strength with reserves providing an adequate buffer against external shocks.
The RBF will continue to assess these developments and will take the necessary actions, if required, to safeguard macroeconomic stability, consistent with its 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