Press Release No 28 – RBF Maintains the Overnight Policy Rate

Press Release No 28 – RBF Maintains the Overnight Policy Rate

The Reserve Bank of Fiji (RBF) Board agreed to maintain the Overnight Policy Rate at 0.25 percent at its meeting on 24 September 2026.

The Governor and Board Chairman, Mr Ariff Ali, stated that the policy choice requires a delicate balance between managing heightened inflationary pressure driven largely by external factors while supporting economic growth amid weakening conditions.

On price developments, headline inflation rose to 7.6 percent in August, up from 5.7 percent in July and -3.5 percent a year earlier.  The annual increase was due to higher prices for food, energy and kava, together with the fading impact of the VAT rate reduction introduced in August 2025.  Inflation is expected to remain elevated and above 6.0 percent through the end of the year, mainly driven by volatility in global commodity prices and weather-related risks associated with the developing El Niño event, which could place additional upward pressure on agricultural, energy, transport and distribution costs.

Foreign reserves stood at around $3.9 billion as of 23 September 2026, sufficient to cover 5.5 months of retained imports, supported by strong tourism and remittances inflows alongside Government external loan drawdowns, and are expected to remain adequate over the medium term.

Despite a challenging global environment, economic activity has tracked expectations, underpinned by better than expected tourism activity, consumer spending and ongoing construction activity.  Provisional data released by the Fiji Bureau of Statistics indicate that Fiji’s economy expanded by 2.5 percent in 2025, while current indicators suggest that economic growth in 2026 is broadly in line with forecast.