Press Release No. : 02/2025
Date : 27 February 2025
Press Release No 02 – RBF Monetary Policy Rate Unchanged
The Reserve Bank of Fiji (RBF) Board agreed to maintain the Overnight Policy Rate (OPR) at 0.25 percent at its meeting on 27 February.
The Governor and Board Chairman, Mr Ariff Ali, stated that the decision was mainly based on the RBF’s current assessment of its monetary policy objectives, inflation and foreign reserves, remaining within comfortable levels. Annual headline inflation rose to 4.0 percent in January 2025 (December 2024: 1.3%), led by one-off increases in prices of local market crops and vegetables owing to the December flooding in the western division. Foreign reserves (27/02) are around $3.6 billion, sufficient to cover 5.8 months of retained imports of goods and services. Looking ahead, the RBF expects inflation to moderate in the coming months with foreign reserves projected to remain adequate over the medium term.
Latest domestic sector data show positive outcomes at the beginning of the year. Visitor arrivals continued to grow, though at a softer pace (0.7%) in January, reaching a record of 70,794 for the month. This growth was driven by higher arrivals from the Pacific Islands, Australia and the United States (US), although it was partially offset by a decline in visitors from New Zealand, Fiji’s second largest source market. Tourism activity, higher wages, consumption-related loans, and remittances translated into robust domestic VAT collections, indicating upbeat consumption activity. New loans for investment purposes increased in January, mainly to the real estate sector suggesting an improvement in investment activity. Additionally, labour market tightness has eased due to better supply, partly shaped by higher foreign workers and lower resident departures.
The Board Chairman added that the banking sector remains supportive of growth with ample system liquidity of $2.1 billion (26/02) and lending rates at near historical lows. Given this conducive environment, private sector credit grew by 11.8 percent in January.
Mr Ali acknowledged the ongoing domestic challenges and emerging external risks to the outlook, particularly the potential effects of rising geopolitical uncertainty, increased trade tariffs and their impact on global activity and Fiji’s trading partners. The Fijian economy could benefit from competitive import prices on goods redirected from countries with higher tariffs to the rest of the world. At the same time, a higher-cost environment in the US could dampen demand for Fijian exports. As such the RBF will continue to closely monitor global & domestic developments and review monetary policy accordingly at its next Board meeting on 27 March 2025.
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