Fiji holds rate, sees inflation below 3.0% end-2015

August 28, 2015

By CentralBankNews.info
    Fiji’s central bank maintained its Overnight Policy Rate (OPR) at 0.50 percent, saying the dual mandates of the bank remain intact with inflation expected to be below 3.0 percent at the end of the year due to low global commodity prices, especially for oil, and low inflation in trading partners.
    The Reserve Bank of Fiji (RBF), which has held its rate steady since November 2011, added that its foreign reserves were “comfortable” at US$1.969.3 billion as of Aug. 25, sufficient for 4.9 months of imports, and compared with $1.999.8 billion as of July 31.
    In a statement from Aug. 27, RBF Governor Barry Whiteside contrasted heightened uncertainty for global economic growth with strong demand in Fiji that is in line with projections for 4.3 percent economic growth for 2015.
   “In particular, increased consumption and investment demand continue to be supported by favorable financial and labour market conditions,” Whiteside said.
    Fiji’s inflation rate rose to 1.4 percent in July from 0.8 percent in June and in the RBF’s review for July it said receipts for the first month of this year confirmed the current positive outlook for primary industries, such as timber and fish exports, while the output of gold, electricity and wood chip was higher in the year recorded to June.

    The Reserve Bank of Fiji issued the following statement:
   

“The Reserve Bank of Fiji Board at its monthly meeting on 27 August agreed to maintain the Overnight Policy Rate at 0.5 percent.
The Governor and Chairman of the Board, Mr Barry Whiteside noted that “positive sectoral outcomes and strong demand conditions in the year to date are in line with the 4.3 percent economic growth projection for this year. In particular, increased consumption and investment demand continue to be supported by favourable financial and labour market conditions.”
Mr Whiteside stated that in contrast, global economic conditions remain fragile, particularly as the recent China currency devaluation heightened uncertainty for the international growth outlook, apart from pushing commodity prices further downwards.
Given the low global commodity prices, especially for oil and soft trading partner inflation expectations, the Governor highlighted that the 2015 year-end inflation is expected to be below 3.0 percent. Foreign reserves are currently (25 August) comfortable at $1,969.3 million, sufficient to cover 4.9 months of retained imports of goods and non-factor services. In short, the dual mandates of the Bank remain stable.
The Governor concluded that, “as a result, the Bank will continue to monitor the latest global and domestic developments and align monetary policy accordingly.”

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