Press Release No. : 08/2023
Date : 25 May 2023
The Reserve Bank of Fiji (RBF) Board has decided to maintain the Overnight Policy Rate at 0.25 percent.
At its meeting today (25/05), the Governor and Chairman of the Board, Mr Ali, stated that economic fragilities will continue to shape global growth prospects. World trade has improved but continues to be affected by the continued war in Ukraine and the lingering effects of COVID-19. In addition, while global inflation continues to moderate, it remains high.
Domestically, Mr Ali mentioned that the latest macroeconomic indicators reveal that Fiji continues to recover from the strengthening tourism industry and its positive domino effect on related sectors. Visitor arrivals are expected to reach 2019 levels by the end of 2023, faster than earlier anticipated following the better-than-expected arrivals in the year to April (252,245 visitors) which was higher than the corresponding 2019 level by 1.4 percent.
Strong consumption activity to date has been supported by increased incomes from higher employment and the steady growth in personal remittances and new consumption loans. Investment activity continues to recover at a moderate pace proxied by the pick-up in new lending to both the real estate and building & construction sectors. Electricity production, an indicator of business activity noted positive outcomes in the year to April, however, industry-specific issues have affected output in the gold and timber industries.
Accommodative financial conditions have continued to support economic recovery. Banking system liquidity sufficiently stands at $2,305.2 million (24/05) keeping outstanding rates at historic low levels and new rates competitive enough to drive private sector credit growth (5.7%) in April.
Against this backdrop, the RBF Board acknowledged that growth in the Fijian economy is likely to be higher than what was earlier projected (6.0%) in November 2022.
On the monetary policy twin objectives, Fiji’s inflation continues to be underpinned largely by imported inflation and mainly in the food and energy categories. In addition, foreign reserves remain at comfortable levels ($3,304.0m as at 25/05) enough to cover 6.1 months of retained imports of goods and services and are projected to be adequate in the medium term.
Considering Fiji’s ongoing recovery and the comfortable outlook for the RBF’s monetary policy objectives the Board decided to keep an accommodative monetary policy stance. The impact of global and domestic developments will continue to be monitored and if required, the monetary policy stance will be adjusted accordingly.
RESERVE BANK OF FIJI
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