Overnight policy rate remains at 0.25 per cent

Fiji’s economic recovery continues on the back of a strengthening tourism industry and its positive flow-on effects to related sectors.

Reserve Bank of Fiji governor and chairman of the RBF board, Ariff Ali said with 636,312 visitors to our shores in 2022, visitor arrivals exceeded expectations and reached 71.1 per cent of 2019 levels.

He highlighted that in December alone, Australian visitors reached an all-time monthly high of 42,304 and remained the top source market, followed by New Zealand and the United States.

The RBF board had met last week where it decided to maintain the Overnight Policy Rate at 0.25 per cent.

Mr Ali said on the monetary policy objectives, year-end inflation cooled to 3.6 per cent in 2022, much lower than the 5 per cent forecast, as prices for food and alcoholic beverages were lower than expected.

Overall, he said the cost of food and energy continued to drive the annual movement in prices, most of which was a spillover from imported inflation.

While inflation is forecast to reach 3.0 per cent in 2023 and moderate in the medium term, foreign reserves remain comfortable at $3.4 billion, enough to cover 6.3 months of retained imports of goods and services and are projected to remain comfortable in the medium term.

Meanwhile Mr Ali said accommodative financial conditions continue to support the recovery.

According to the governor ample banking system liquidity of $2.5 billion kept outstanding deposit and lending rates at historically low levels and new rates competitive enough to drive private sector credit growth by 7.1 per cent to a 41-month high in December.

Statistics provided by the central bank show that in 2022, commercial banks’ new loans totalled $3.3b, an increase of 39.7 per cent from last year.

Mr Ali said while they expected the domestic economy to grow further this year, the labour market was expected to tighten with increased employment opportunities and migration.