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RBF: Strong Consumption And Ongoing Investment Activity Driving Economy

Current performance leads to monetary Overnight policy rate being maintained at 0.5 per cent The domestic economy continues to be driven by strong consumption and ongoing investment activity, says the
26 Aug 2016 20:54
RBF: Strong Consumption And Ongoing Investment Activity Driving Economy

Current performance leads to monetary Overnight policy rate being maintained at 0.5 per cent

The domestic economy continues to be driven by strong consumption and ongoing investment activity, says the Reserve Bank of Fiji Governor, Barry Whiteside.

“Apart from the sugar and timber sectors, most other sectors recorded higher output annually including gold, electricity and visitor arrivals,” he said.

“Financial conditions continue to be favourable indicated by adequate bank liquidity and low lending rates, while credit growth has slowed over the year.”

On the growth outlook, Mr Whiteside said: “The subdued global growth performances and prospects imply a possible dampening in our remittances and tourism earnings.”

But he emphasised annual projections are still higher than last year’s record levels.

In light of this, the Reserve Bank Board at its August meeting decided to maintain the Overnight Policy Rate at 0.50 percent.

 

Monetary policy stance

Mr Whiteside said the twin objectives of monetary policy remain intact.

As of August 24, , foreign reserves were $1,920.7 million, sufficient to cover 5.3 months of retained imports.

Reflecting the impact of the natural disasters, inflation increased for the fourth consecutive month in July to 5.5 per cent.

This was mostly driven by the shortages in market-related items following the tropical cyclones and floods earlier this year, higher excise duty on alcoholic beverages and tobacco and the increase in fuel prices in July.

The year-end inflation forecast remains at around 3.5 per cent. Over the medium term, the impact from the natural disasters is expected to taper.

Notwithstanding any significant risks from higher commodity prices, particularly crude oil and food, inflation is expected to normalise.

“Monetary policy will remain accommodative and focus on supporting the domestic economic recovery while the Bank will continue to monitor all macroeconomic developments and align monetary policy accordingly,” he said.

Feedback:  rachnal@fijisun.com.fj

 

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