Press Release No. : 09/2024
Date : 25 April 2024
Press Release No 09 – RBF Maintains Overnight Policy Rate
The Reserve Bank of Fiji (RBF) Board maintained the Overnight Policy Rate at 0.25 percent at its meeting on 25 April.
The Governor and Chairman of the Board, Mr Ali, stated that current economic indicators suggest a return to growth trend for the domestic economy following the past two years of post-pandemic recovery. Domestic demand has slowed, as evidenced by the lower annual growth in domestic VAT collections despite the increase in income levels. Additionally new loans extended for consumption purposes fell marginally over the year. Investment activity continues to experience a slow-paced recovery. Demand for labour continued to grow amid the ongoing outflow of workers, which has kept wage growth strong and labour market conditions tight. According to the RBF’s February Business Expectations and Retail Sales Survey results, many businesses anticipate an improvement in general business conditions over the next six to twelve months. However, the positive sentiments expressed are lower when compared to the survey conducted in August 2023.
The Governor added that remittances (9.8% up to February) and the tourism sector remain supportive of economic activity. Visitor arrivals totalled 194,391 cumulative to March, 10.9 percent higher than the same period last year, and mainly driven by visitors from China, New Zealand and the United States of America, while visitors from Australia, Fiji’s largest source market, contributed marginally to the outcome.
Banking system liquidity slowed further over the month but remains ample at $1.9 billion (as of 23 April). In line, time deposit rates have started to pick up. Moreover, the pace of new lending by banks has moderated over the year (8.1% from 21.6%), with total new lending amounting to $0.9 billion in March.
On the RBF’s twin monetary policy objectives, Mr Ali mentioned that the annual headline inflation rate remained unchanged at 4.6 percent in March underpinned by higher food prices particularly prices of market items. Foreign reserves fell over the month and, as of 25 April, stood at around $3.2 billion, sufficient to cover 5.1 months of retained imports of goods and services. The level of foreign reserves is projected to remain adequate over the medium term.
The Chairman concluded, that given the stable outlook for inflation and foreign reserves, the current monetary policy setting is appropriate. However, the RBF will closely monitor developments and risks to the global and domestic economic outlook and will set 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