Press Release No. : 22/2022
Date : 24 November 2022
The Reserve Bank of Fiji (RBF) Board agreed to maintain the Overnight Policy Rate at 0.25 percent in its monthly meeting on 24 November.
The Governor and Chairman of the Board, Mr Ariff Ali stated that “domestic economic activity continues to be resilient against global headwinds, supported by the impressive recovery in the tourism and service-related industries. Visitor arrivals from January to October totaled 497,086 and was 66.1 percent of the same period in 2019. For October alone, visitor arrivals were 90.6 percent of the visitors received in October 2019. The recovery rate relative to the same month in 2019 has averaged 82.6 percent for the past five months.”
The Governor added that “the associated rebound in aggregate demand remains solid, driven by the robust growth in employment and inward remittances. Latest partial indicators of consumption, such as net VAT, have surpassed pre-pandemic levels while PAYE and formal employment have almost recovered to pre-crisis levels. The financial sector is also supportive of growth as credit to the private sector continues to expand amid high liquidity levels and relatively low lending rates. Given these developments, the economy is projected to expand by 15.6 percent this year and 6.0 percent next year.”
Mr Ali also highlighted that higher imported energy and food prices led to a pick-up in inflation to 5.4 percent in October. Nonetheless, inflation is projected to subside to around 5.0 percent by year-end and drop to 3.0 percent by the end of 2023 as the constraints affecting global food and energy supplies are expected to dissipate. Foreign reserves are currently at $3,439.7 million (24 November 2022), sufficient to cover 7.0 months of retained imports of goods and services, while the reserves coverage over the medium term is projected to be above the benchmark of 4.0 months.
However, the Chairman cautioned that the economic outlook remains precarious, given the broad-based deceleration in the world economy and the continued global geopolitical tensions, which can negatively impact our monetary policy objectives and the economic recovery moving forward.
The Governor concluded that “given the comfortable outlook for inflation and foreign reserves, the current accommodative monetary policy stance remains appropriate to support economic recovery efforts. The RBF will continue to monitor global and domestic economic developments closely and align monetary policy accordingly.”
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