Press Release No. : 12/2023
Date : 27 July 2023
RBF Maintains an Accommodative Monetary Policy Stance
The Reserve Bank of Fiji Board decided to maintain the Overnight Policy Rate (OPR) at 0.25 percent during its meeting today.
Mr. Ariff Ali, Governor and Chairman of the Board, stated that challenges and concerns facing the global economy remain. In its July 2023 World Economic Outlook, the International Monetary Fund expects global growth to decelerate (from 3.5% in 2022 to 3.0% in both 2023 and 2024), with economic activity being weighed down by central banks’ monetary policy tightening to contain the still high global inflation. In particular, growth in our two major tourism source markets, Australia and New Zealand, has been subdued and is likely to remain weak for the remainder of the year.
On the domestic front, Mr. Ali communicated that, relative to last year, the Fijian economy has been performing well and is poised to achieve the 8.0 percent growth forecast for 2023. In the first half of the year, labour demand and consumer spending have been strong. Despite noting a recovery, investment spending remains below pre-pandemic levels. Additionally, indicators used to assess the performance of the tourism industry, such as visitor arrivals, hotel occupancy and earnings, have surpassed 2019 levels, signifying a positive trend that is projected to continue into the second half of the year. This has been supported by increased capacity as well as new routes by the national airline. In addition, the expansionary posture of the Fiscal Year 2023–24 National Budget is likely to positively impact the economy in the months ahead.
The Governor also stated that stable domestic activity has been bolstered by a robust financial sector, where private sector credit has expanded (6.1% y-o-y in June), partly due to a rise in new lending by banks (7.1% cumulative to June). The outturn is supported by the low interest rate environment as a result of the supportive monetary policy stance and complemented by substantial levels of banking system liquidity ($2.5 billion as of 26/07).
On consumer price developments this year, Mr. Ali conveyed that annual headline inflation was subdued in June (0.9%) owing to lower prices across major categories, particularly alcoholic beverages and narcotics, as well as fuel and related items. However, taxation policies announced in the National Budget are expected to put upward pressure on domestic consumer prices. Foreign reserves are adequate at $3.5 billion as of 27 July, enough to cover 6.2 months of retained imports.
The Governor concluded that despite near-term concerns about the global economy, Fiji’s macroeconomic prospects are positive, and the outlook for RBF’s twin monetary policy objectives remain intact. With this backdrop, the current accommodative stance will be maintained, and the RBF will continue to closely monitor global and domestic economic developments and adjust 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