Press Release No. : 18/2026
Date : 30 July 2026
Press Release No 18 – RBF Maintains the Overnight Policy Rate
The Reserve Bank of Fiji Board decided to maintain the Overnight Policy Rate at 0.25 percent following its meeting on 30 July. The Governor and Board Chairman, Mr Ariff Ali, explained that slowing economic conditions, coupled with inflation caused by more expensive imports, support the decision to hold the overnight policy rate steady.
On price developments, Mr Ali highlighted that inflation rose to 6.1 percent in June, up from 3.9 percent in May and -1.2 percent in June last year. This increase was largely driven by higher fuel and gas prices, alongside higher electricity costs as the impact of Energy Fiji Limited’s fuel surcharge took effect. Together, these factors directly accounted for approximately 4.5 percentage points of the inflation rate recorded in the month under review. Renewed conflict between the United States and Iran led to a sharp increase in global oil prices, with Brent crude oil rising slightly above US$100 per barrel (on 23 July) before easing to around US$84 per barrel by 29 July. Nevertheless, prices remain elevated compared with end-June levels. As an importer of fuel, Fiji remains vulnerable to such external developments, which could place further upward pressure on domestic fuel prices, transportation costs and broader production expenses. If current oil prices persist, inflation is expected to remain above 6.0 percent through the end of the year.
At the same time, foreign reserves remain adequate at around $3.9 billion (as of 30 July) sufficient to cover 5.4 months of retained imports. Foreign reserves are expected to remain at comfortable levels over the medium term, supported in part by planned Government loan drawdowns.
Domestic activity continues to be supported by the tourism sector. After recording year-on-year declines in April and May, visitor arrivals recovered strongly in June, bringing cumulative arrivals to 460,628 for the first half of the year, 3.8 percent higher than the corresponding period in 2025. However, developments in other sectors indicate some moderation in growth momentum, with softer outcomes recorded in timber, gold doré, cane production and manufacturing. On the demand side, consumption activity has shown signs of easing despite support from higher household incomes and strong remittance inflows. In contrast, investment activity has remained resilient, supported by higher new investment lending and increased imports of construction-related materials. However, supply side constraints, including higher fuel and freight costs, labour shortages, and election year uncertainty could weigh on investment prospects going forward.
The Governor further stated that financial conditions remain accommodative, supported by ample liquidity ($2.0 billion as of 29 July), which has helped keep lending rates low. This has continued to support borrowing by households and businesses and contributed to sustained growth in private sector credit. He added that the strength of the financial system provides an important buffer against temporary domestic and external shocks.
On the global front, the International Monetary Fund has further lowered its global growth forecast for 2026 to 3.0 percent, reflecting the impact of ongoing geopolitical tensions, elevated commodity prices and heightened uncertainty. Slower growth among Fiji’s major trading partners could dampen demand for tourism and exports. At the same time, the risk of El Niño-induced dry conditions could affect agricultural production, energy generation and other climate-sensitive sectors, posing additional downside risks to the economic outlook.
The Reserve Bank will continue to closely monitor incoming information and its implications on the current outlook and will align monetary policy if needed.
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