Press Release No. : 13/2025
Date : 28 August 2025
Press Release No 13 – RBF Maintains the Overnight Policy Rate
The Reserve Bank of Fiji (RBF) Board decided to keep the Overnight Policy Rate (OPR) at 0.25 percent following its monthly meeting held on 28 August 2025.
The Governor and Chairman of the Board, Mr Ariff Ali, stated that the Bank’s twin objectives of low and stable inflation and maintaining an adequate level of foreign reserves remain intact. Annual headline inflation was -0.4 percent in July, marking a second consecutive month in negative territory, from -0.6 percent in the previous month and 6.8 percent in July 2024. Prices for food, transport, cooking gas and other fuels noted large comparative declines which outweighed price increases in alcoholic beverages, narcotics & tobacco and miscellaneous goods. With recent tax cuts announced in the FY2025-26 National Budget now in effect, there will be downward pressure on inflation in the near term. Foreign reserves are at comfortable levels, around $3.9 billion at August end, sufficient to cover 6.0 months of retained imports of goods and services and are projected to remain adequate over the medium term.
Domestically, partial indicators suggest strong consumption activity, reflected in higher net VAT collections (5.4%), vehicle registrations (22.0%) and consumption lending (35.1%) in the year to July. This momentum is supported by favourable lending rates, increased remittance inflows and income levels. On the other hand, high building material prices in the first half of the year (4.0%) have weighed on investment recovery. While there is modest growth in investment lending (1.4%) cumulative to July, easing labour market pressures and supportive budget policies are expected to strengthen large pipeline investment prospects.
Sectoral performances were mixed. Visitor arrivals (543,073) contracted by 0.4 percent in the year to July, largely due to lower arrivals from Australia, New Zealand and the Asian markets. However, visitor arrivals marked a fourth consecutive month of growth in July when compared to the same period last year, with a recovery in arrivals from Australia coupled with higher number of visitors from the United States. The outlook for the tourism industry is expected to improve further amid positive industry sentiments and the reduction in the VAT rate which will potentially lower the cost of holidaying in Fiji. Electricity and timber production rose cumulative to July, while mineral water and gold ore output fell. In addition, the ongoing challenges of the sugar industry such as mill breakdowns and poor cane quality have affected sugar output.
Strong credit activity in July was supported by high banking system liquidity (around $2.2 billion as of 27 August) and the low-interest rate environment, which contributed to a 9.5 percent expansion in private sector credit.
The Governor noted that global risks, particularly those related to trade and geopolitics, could have a bearing on Fiji’s economic outlook and the RBF’s twin objectives. The RBF will continue to closely monitor international and domestic developments and adjust monetary policy as and when necessary.
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