THE Reserve Bank of Fiji has kept its Overnight Policy Rate (OPR) unchanged for last five years, taking it further into the sixth year running with the latest decision from its board after its meeting last Thursday.
RBF Governor and board chairman Ariff Ali said the central bank’s monetary policy objectives of maintaining price stability and ensuring an adequate level of foreign reserves continued to be effectively met.
“Growth in the annual inflation rate softened to 0.1 per cent in May from the 5.8 per cent registered a year ago.
The softening is mostly driven by comparatively lower food and fuel prices which slightly offset the higher prices for kava and alcoholic beverages.
“Foreign reserves are around $3.7 billion (26/06), sufficient to cover 5.8 months of retained imports of goods and services and are projected to remain adequate in the medium term,” RBF stated.
While visitor arrivals grew in May compared to May 2024, visitor arrivals from Fiji’s key source markets were down during the first five months of 2025 compared to the same period last year, RBF noted.
Visitor arrivals from Australia declined by 2.7 per cent and New Zealand by 8.1 per cent, dampening higher numbers from Pacific Island countries (17.2 per cent) and the United States (11.1 per cent).
The performance of resource-based sectors continued to improve except for gold production which has been impacted by industry specific challenges.
RBF also noted strong consumption activity, which it said was supported by higher income, inward remittances and new lending by commercial banks for consumption purposes.
Investment activity however, while registering a gradual improvement, “continues to be weighed down by elevated costs of doing business and regulatory hurdles”.
Furthermore, the tight labour market conditions experienced in recent years have eased, mitigated by lower resident departures and increased intake of foreign workers.
With the OPR being at its lowest six years in a row and the financial system carrying “ample” liquidity of $2.1 billion (24/06) and market interest rates at historical lows, private sector credit grew by 9.6 per cent in May.
Governor Ali said while this will be supportive of the 3.2 per cent growth forecast for 2025, the central bank will continue to monitor the evolving tensions in the Middle East and its impact on global fuel prices as well as other domestic and global developments and will align monetary policy accordingly.
Note: This article was first published on the print version of the Fiji Times dated June 28, 2025
