Press Release No. : 12/2026
Date : 28 May 2026
The Reserve Bank of Fiji (RBF) Board has decided to keep the Overnight Policy Rate unchanged at 0.25 percent.
The Governor and Chairman of the Board, Mr Ariff Ali, explained that monetary policy must carefully balance the need to contain rising inflation driven by external factors while supporting economic activity.
Mr Ali stated that inflation is expected to continue to rise in the near term, mainly due to external factors beyond Fiji’s control, particularly higher global fuel prices linked to the ongoing conflict in the Middle East. These pressures are already feeding into domestic prices including transport and electricity costs. Recent data show that headline inflation[1] rose to 1.8 percent in April, after more than a year of deflation, largely driven by higher prices for fuel, food and kava. Similarly, core inflation[2] increased to 1.7 percent mostly driven by higher kava prices. The extent of these price pressures will depend on how long the conflict lasts and how severe it becomes.
Economic activity continues to be supported by inflow of remittances and tourism activity, although there are early signs that overall economic growth is beginning to moderate.
At the same time, foreign reserves stand at around $3.4 billion (as of 28 May), sufficient to cover 4.9 months of retained imports and are expected to remain adequate in the near to medium term, supported in part by more moderate import demand as economic activity slows.
Despite these challenges, the Governor emphasised that the financial system remains supportive, with ample liquidity ($1.6 billion as of 27 May) and continued growth in private sector lending. Financial stability remains intact with the banking system adequately capitalised to withstand temporary global and domestic shocks.
Mr Ali said that, taken together, these conditions support maintaining the current monetary policy stance, which is expected to continue to provide stability to the economy.
Looking ahead, risks to the outlook remain. Inflation could rise further if global fuel prices stay high, while tighter financial conditions in key tourism markets may weigh on travel demand and reduce foreign exchange earnings. Domestically, inflation is also expected to rise further in 2026 following the recent increase of 5.91 cents per Unit in electricity tariffs by Energy Fiji Limited (EFL), which will raise operating costs for businesses and households. The direct impact of the EFL surcharge and the fuel price increase in May is estimated to add around 0.5 percentage points and 0.9 percentage points, respectively to overall inflation. Regarding foreign reserves, a sustained period of elevated global oil prices and ongoing geopolitical tensions would increase fuel and freight costs, widen the trade deficit and exert downward pressure on reserves. However, Government’s expected offshore loan drawdown in the later part of the year will cushion it.
The Reserve Bank is closely monitoring these developments and will take necessary actions if required, to safeguard macroeconomic stability, consistent with its mandate.
RESERVE BANK OF FIJI
For further details, please contact:-
Communications Office
Telephone: (679) 3223 381 Email: info@rbf.gov.fj
Mr Mervin Singh – Manager Corporate Communications
Telephone: (679) 3223 229 Email: mervin@rbf.gov.fj
[1] Is the rate of increase in the level of prices of the good and services that households buy.
[2] Core inflation is a measure that focuses on underlying and persistent trends in inflation by excluding prices of volatile items (food and energy) from the Consumer Price Index basket. This is internal estimation of the RBF.