Press Release No. : 11/2023
Date : 13 July 2023
RBF Maintains an Accommodative Monetary Policy Stance
The Reserve Bank of Fiji (RBF) Board decided to maintain the Overnight Policy Rate at 0.25 percent at its meeting on 12 July, 2023.
The Governor and Chairman of the Board, Mr Ali, highlighted that “domestically, the tourism led economic recovery has kept pace and the recently announced FY2023-24 national budget will provide additional stimulus and support economic activity going forward.”
The Governor added that the recovery in tourism coupled with improvements in labour demand and income, continued growth in personal remittances and new consumption loans have underpinned the steady growth in consumer spending so far into the year. Additionally, investment spending has improved relative to last year and is expected to pick up further from the second half of the year following the announcement of the national budget. In contrast, production in the natural resource sectors such as forestry, mining and mineral water has noted annual contractions so far into the year due to industry-specific supply-side issues and lower demand.
On the financial sector, the Governor highlighted that there has been a continuous expansion in private sector credit activity (6.5% in May) while the more than ample banking system liquidity ($2.5 billion as of 12/07) has kept lending rates at historically low levels. Overall the financial system remains stable with adequate capital and provisioning.
On the RBF’s twin monetary policy objectives, Mr Ali stated that “headline inflation has been on a declining trend and moderated to 0.8 percent in May from the 1.4 percent recorded in April, mostly owing to lower fuel and kava prices. However, given the recently announced tax increases in the FY2023-24 national budget, inflation is expected to rise from August onwards and register at 4.7 percent at the end of the year before subsiding to 2.5 percent by the end of 2024.”
The Governor added that “foreign reserves remain comfortable ($3.6b as of 12/07), sufficient to cover 6.3 months of retained imports of goods and services and the medium term outlook is above the benchmark of 4.0 months of import cover. ”
The Governor concluded that the current monetary policy stance will continue as long as the outlook for inflation and foreign reserves are within the comfortable range. The RBF will continue to closely monitor global and domestic economic developments, 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