Thursday, October 30, 2014

Fiji holds rate, to mull change after 2015 govt budget

    Fiji's central bank maintained its benchmark Overnight Policy Rate (OPR) at 0.5 percent and said its monetary policy stance would be "re-aligned if needed" after the government announces the 2015 fiscal budget.
    The guidance by the Reserve Bank of Fiji (RBF), which has held the OPR steady since November 2011, compares with its guidance from its board meeting in September when it said its policy stance could remain accommodative for now to support growth.
    The RBF also said that both its objectives of inflation and foreign reserves would remain within the bank's comfortable range over the medium term while the economy is poised for its fifth year of consecutive growth, driven largely by tourism, sugar, construction and financial services.
    Fiji's economy expanded by 4.6 percent in 2013, above expected growth of 3.6 percent, and the RBF said in its September report that the economy is on track to achieve the forecast 3.8 percent growth this year.
    The RBF issued the following statement:

"The Reserve Bank of Fiji (RBF) Board in its monthly meeting on 31 October decided to leave the Overnight Policy Rate (OPR) unchanged at 0.5 percent.

The Governor and Chairman of the Board, Mr Barry Whiteside, while announcing the decision stated that “the domestic economy is poised for its fifth year of consecutive growth this year, driven largely by robust performance in key sectors such as tourism, sugar, construction and financial services. On the demand side, consumption and investment spending remains firm, supported by strong private sector credit growth and improved confidence.”
Mr Whiteside however, cautioned that pressure on the balance of payments front from the above trend growth in aggregate demand and continued higher growth in imports relative to exports remain a concern. Nonetheless, the Governor advised that current assessment indicates that both objectives of monetary policy will remain within the comfortable range over the medium term.
Inflation slowed further to 0.3 percent in September and the year-end forecast is 1.5 percent. Foreign reserves were around $1,749 million on 31 October, sufficient to cover 4.6 months of retained imports of goods and non-factor services and are projected to also remain at sufficient levels over the medium term.
The Governor concluded that the outlook for both objectives will be re-assessed after the announcement of the 2015 National Budget and monetary policy stance will be re-aligned if needed."


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