The Reserve Bank of Fiji (RBF) has decided to maintain its Overnight Policy Rate (OPR) at 0.25 percent, marking six years of stability in this rate. RBF Governor Ariff Ali noted that the bank’s monetary policy objectives are being met effectively, particularly regarding price stability and maintaining a healthy level of foreign reserves.
In recent data, the annual inflation rate in Fiji has dropped considerably to just 0.1 percent in May, down from 5.8 percent a year earlier. This decline primarily results from reduced food and fuel prices which have offset increases in kava and alcoholic beverages. Additionally, foreign reserves currently stand at around $3.7 billion, which is sufficient to cover 5.8 months of imports, and projections indicate that this level of reserves will remain adequate in the medium term.
The tourism sector, a crucial component of Fiji’s economy, reported a rise in visitor arrivals for May; however, arrivals have declined overall in the first five months of 2025, particularly from Australia and New Zealand. Despite this, stronger numbers have been observed from Pacific Island countries and the United States.
The performance of the resource-based sectors continues to improve, although gold production has faced specific industry challenges. Consumption remains robust, driven by higher incomes, remittances, and new lending from commercial banks. Nonetheless, investment activity is experiencing slow improvement, hindered by the high costs of doing business and regulatory challenges. Labor market conditions have eased, aided by a reduction in local workforce departures and an increase in foreign labor intake.
With the financial system holding ample liquidity of $2.1 billion, private sector credit grew by 9.6 percent in May, which supports the forecasted economic growth of 3.2 percent for 2025. Governor Ali underscored that while monitoring potential global influences, especially tensions in the Middle East that may impact fuel prices, the central bank remains committed to adjusting its monetary policy as needed to nurture the economy’s resilience.
The outlook for Fiji’s economy remains optimistic, with the promise of continued growth as the central bank maintains its focus on stability and adaptability in policy-making.
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