Press Release No. : 18/2023
Date : 26 October 2023
Press Release No 18 – RBF Maintains an Accommodative Monetary Policy Stance
The Reserve Bank of Fiji (RBF) Board maintained the Overnight Policy Rate at 0.25 percent.
The Governor and Board Chairman, Mr Ariff Ali stated that the domestic economy is on track to achieve the envisaged growth for this year on the back of strong tourism industry performance. The influx of visitors up to September and the high room rates boosted revenue gains per room sold. In addition, the outlook for the tourism industry remains promising based on forward bookings for October. Aggregate demand remains robust with consumption proxies such as net Value Added Tax (VAT) collections and banks’ new consumption lending noting a growth in the review period. Investment activity, although modest, has been improving evident by higher value of work put in place up to June. The outlook for investment activity is positive based on increases in forward looking indicators such as banks’ new investment lending and domestic cement sales up to September. In addition, respondents to the July 2023 Business Expectations Survey have indicated plans to invest in new plant and buildings in the next 12 months.
Financial conditions in the economy remain supportive of the recovery process, with the expansion in private sector credit (5.5%) mostly driven by households in September amid the high system-wide liquidity ($2.3b on 25/10) and historic low lending rates.
The monetary policy objectives remained intact in the review period. The annual headline inflation rate was 2.5 percent in September and is expected to rise in the coming months as the full impact of the increase in VAT and other taxes pass through to final prices. As of 26 October, foreign reserves stood at $3,495.40 million, sufficient to cover 6.2 months of retained imports, and are expected to remain adequate in the medium term.
Given the steady economic rebound, risk assessment and the outlook on the monetary policy objectives, the Board agreed to maintain the current accommodative monetary stance. The RBF will continue to monitor risks and developments and align monetary policy accordingly.
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