The Reserve Bank of Fiji (RBF) Board has decided to maintain the Overnight Policy Rate at 0.25 percent following its meeting on 30 April.

The Governor and Board Chairman, Mr Ariff Ali, stated that the decision reflects the Bank’s commitment to balancing support for domestic economic activity as well as ensuring financial stability. He emphasised that the Bank remains focussed on achieving its core objectives of maintaining low and stable inflation as well as safeguarding foreign reserves both of which are currently at comfortable levels.

Annual headline inflation remained in negative territory and stood at -0.8 percent in March, according to the Fiji Bureau of Statistics. However, the recent hike in fuel prices arising from the US-Iran conflict and the closure of the Strait of Hormuz, together with potential higher prices of market items following Tropical Cyclone Vaianu is expected to put upward pressure on inflation in the coming months. Foreign reserves are adequate at around $3.4 billion (30/04), sufficient to cover 4.9 months of retained imports of goods and services and are expected to remain comfortable over the medium term.

Domestic economic activity continued to be supported by the tourism sector, with visitor arrivals expanding by a robust 7.0 percent in the first quarter of the year. On the demand side, consumption activity has shown signs of moderation despite support from growing household incomes, strong remittance inflows, and increased employment. In contrast, investment activity remains positive, consistent with increases in new investment lending and construction-related imports, as well as some moderation in building material prices. Looking ahead, supply side pressures, including rising fuel and freight costs, shortages of skilled labour and a more cautious wait‑and‑see stance by businesses in an election year, present potential constraints to investment activity.

The impact of the US-Iran conflict on the Fiji economy is expected to materialise through a number of channels, including higher fuel prices, an increase in inflation, disruptions to the supply chain and through tourism from our key source markets. The International Monetary Fund has recently revised down its global growth outlook for 2026 to 3.1 percent, noting that growth could weaken further if the war persists and oil prices increase sharply. As a price taker, Fiji remains vulnerable to extended periods of high global fuel prices, which could increase the cost of living, constrain household spending, raise business expenses and delay investment, ultimately dampening growth and, in worse cases, heightening risks of a recession. At the same time volatility in global oil markets could weaken travel sentiment and increase airfare costs, potentially impacting visitor arrivals in the months ahead. Given these developments, GDP growth for 2026 is downward biased.

The Reserve Bank will continue to closely monitor developments in global oil markets, foreign exchange flows, reserve adequacy and domestic economic conditions and stands ready to take necessary actions if required to safeguard macroeconomic stability in line with its mandate.