Press Release No. : 17/2023
Date : 28 September 2023
Press Release No 17 – RBF Maintains Accommodative Monetary Policy Stance
The Reserve Bank of Fiji (RBF) Board agreed to maintain the Overnight Policy Rate at 0.25 percent at its meeting today.
The Governor and Board Chairman, Mr Ariff Ali, stated that the global economy lost momentum in August due to weak demand, slower growth, and higher-than-anticipated inflation.
Mr Ali added that according to the Fiji Bureau of Statistics (FBoS), the Fijian economy grew by 20.0 percent in 2022, surpassing the Macroeconomic Committee’s earlier estimate of 18.6 percent. Growth in 2022 was driven mainly by a strong services sector and net indirect taxes. While the economy is on track for an 8.0 percent growth this year, sectoral performances remain weak due to industry-specific issues. Consumption activity has been robust in the review period, evidenced partially by higher net value added tax collections and an increase in commercial banks’ new loans. Investment activity continues to note stable recovery, driven by higher domestic cement sales and strong demand for credit in the real estate and second-home buyer categories.
Financial conditions remain favourable for economic activity, with growth in private sector credit and new lending primarily to households increasing. Liquidity levels in the banking system remain adequate at $2,406.4 million (27/09).
On the RBF’s twin monetary policy objectives, the inflation outlook for year-end is now around 6.0 percent from the 2.8 percent expected before the national budget. This upward revision stems from higher duties and taxes announced in the national budget and the recent rebound in global crude oil prices. Foreign reserves are at $3,578.5 million as of 28 September, sufficient to cover 6.3 months of retained imports and is anticipated to remain adequate in the medium term.
In terms of macroeconomic risks, these remain tilted to the downside and mainly emanate from the global front. Several external risks include elevated core inflation, growing costs in international travel, higher commodity prices, export restrictions by major global suppliers, geopolitical tensions, and higher interest rates. The El Nino phenomenon is also expected to exacerbate the current challenges further. On the domestic front, risks to the outlook are in the form of introduced taxes, continued migration of skilled workers, and the impact of climate change. Additionally, addressing the tourism industry’s current capacity constraints and prioritising private sector investment is crucial for sustainable growth.
Nonetheless, given Fiji’s stable economic recovery, assessment of risks as well as the comfortable outlook for the RBF’s twin objectives, the Board maintained an accommodative monetary policy stance. The RBF will continue to monitor developments and their implications on the current macroeconomic outlook and align 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