Fiji Keeps Policy Rate at 0.25% as Tourism Recovers and Inflation Dips

The Reserve Bank of Fiji has left the Overnight Policy Rate unchanged at 0.25 percent, signaling a continued guard for price stability while supporting domestic demand. Inflation dipped further into negative territory, with July printing at -0.4 percent as lower food, fuel, and transport costs underscored the soft price environment. The central bank also noted that recent tax cuts are likely to keep consumer prices more affordable in the near term.

Foreign reserves remain comfortable at about $3.9 billion, providing a solid buffer to cover six months of imports and helping cushion the economy against global shocks. On the domestic side, consumption remains robust, helped by strong vehicle sales, steady remittance inflows, and healthy lending activity. However, the bank pointed to investment as the area facing headwinds, constrained by elevated building-material costs and other cost pressures.

Tourism is on the mend, with visitor arrivals rising for four consecutive months and led by growth from Australia and the United States, signaling a steady recovery in one of the economy’s key engines. Despite these positives, the central bank warned that ongoing global trade tensions and geopolitical risks could influence Fiji’s outlook, and it reiterated that it stands ready to adjust policy if needed to maintain stability and growth.

Context from recent updates shows that inflation is easing, reserves stay ample, and the consumer sector remains resilient, even as investment activity and some tourism metrics continue to recover at a slower pace. The policy stance reflects a careful balancing act: support growth and domestic demand while preventing a rebound in inflation should external risks intensify.

Overall, Fiji’s economy appears to be navigating a positive path, with strong consumer activity and a rebound in tourism underpinning growth, while the central bank keeps policy flexible to respond to evolving global and domestic challenges. If events unfold as anticipated, the outlook remains cautiously optimistic for continued stabilization and gradual expansion. Additional observations suggest that tax measures and the stable monetary environment could further bolster real incomes and consumer spending in the near term.