Press Release No. : 15/2024
Date : 25 July 2024
Press Release No 15 – RBF Maintains Monetary Policy Stance
The Reserve Bank of Fiji (RBF) Board decided to maintain the Overnight Policy Rate at 0.25 percent during its monthly meeting on 25 July.
The Governor and Board Chairman, Mr Ariff Ali, highlighted that the Fijian economy has been largely driven by consumption activity supported by the higher tourist demand, personal remittances and improved disposable incomes resulting from current tight labour market conditions. Investment activity is slow paced but recent forward-looking indicators point to a gradual improvement. Going forward, the initiatives announced in the fiscal year 2024-25 National Budget is expected to stimulate economic activity.
While sectoral outcomes varied through to June, the tourism sector sustained its positive momentum into its peak season. Visitor arrivals in the first half of the year grew annually by 7.0 percent to 447,155 visitors, driven by more visitors from New Zealand, the United States, China, Australia and the Pacific Island Countries. On the sectoral front, annual gains were recorded for gold and electricity output, however, timber and mineral water production remain muted in the year to June.
The Governor stated that the financial sector remains conducive for growth with the low interest rates supporting private sector credit growth which accelerated to 11.3 percent in June, the highest since July 2017 (15.6%).
On the monetary policy objectives, Mr Ali stated that the annual headline inflation rate picked up from 5.8 percent in May to 6.7 percent in June, and was underpinned by higher prices in the food & non-alcoholic beverages, alcoholic beverages, tobacco & narcotics, transport, housing utilities, and restaurants categories. While inflation is expected to moderate from August 2024 after the impact of the VAT increase drops-out from the base effect, it is forecast to remain around 4-5 percent by end 2024.
As of 25 July, foreign reserves stood at $3.5 billion, sufficient to cover 5.8 months of retained import of goods and services, and are projected to remain adequate over the medium term.
The Board Chairman indicated that after weighing in the current economic conditions and risks, the medium-term outlook for inflation and foreign reserves was stable. Therefore, the current monetary policy setting will be maintained for now to support economic growth. The RBF will continue to monitor incoming information and its implications on the current outlook 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