Press Release No. : 06/2024
Date : 28 March 2024
Press Release No 06 – RBF Maintains an Accommodative Monetary Policy Stance
The Reserve Bank of Fiji (RBF) Board decided to maintain the Overnight Policy Rate at 0.25 percent at its meeting on 28 March.
The Governor and Board Chairman Mr Ariff Ali stated that recent indicators support Fiji’s economy returning to trend growth in 2024. Consumption spending in the first two months of year remain positive, supported by increased tourism activity, higher remittance inflows and the rise in disposable income levels.
However, the pickup in investment activity has been comparatively slow, owing to a combination of factors. Similarly, production in the resource-based sectors continue to note annual contractions due to industry-related issues. Despite the strong growth in wages and salaries over the past year, Fiji’s labour market pool continues to be affected by higher emigration and the number of job vacancies has increased significantly, reflecting the need to replenish the workforce lost.
The Governor added that tourism data continues to surprise on the upside as visitor arrivals totalled 125,056 visitors cumulative to February, 9.0 percent higher than the same period last year. The annual increase was largely driven by the pickup in arrivals from New Zealand and North America while visitors from Australia, Fiji’s biggest source market, fell for the third consecutive month.
The Governor also highlighted that the financial system is sound and supportive of economic activity. Liquidity in the banking system remains ample at $1.9 billion as at 27 March, keeping lending rates low and supporting the expansion of private sector credit (8.2% in February). However, the Governor alerted that liquidity is expected to dip slightly over the next few months and then pick up again from the middle of the year as planned external loans are drawn by the Government, and the peak tourism season starts.
On the RBF’s twin monetary policy objectives, Mr Ali mentioned that the annual headline inflation rate rose to 4.6 percent in February from the 3.6 percent noted in January largely driven by the higher prices in the food and non-alcoholic beverages category. However, the year-end headline inflation is forecast to moderate to 3.0 percent, notwithstanding commodity price shocks that could alter the outlook. As of 28 March, foreign reserves stood at around $3.1 billion, sufficient to cover 5.1 months of retained imports of goods and services, and are projected to remain within the adequate range over the medium term.
The Board Chairman concluded that given the stable outlook for inflation and foreign reserves, the accommodative monetary policy stance can be continued to support economic activity. However, the RBF will continue to closely monitor economic developments and align monetary policy accordingly.
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