THE overnight policy rate may remain at 0.5 per cent for some time.
Reserve Bank of Fiji governor, Barry Whiteside said that at the last RBF board meeting, it was decided to keep the rate at 0.5 per cent adding that it could not be reduced much further.
"...It is the direction, which we want to see interest rates throughout the financial system, we are trying to keep the interest rates low and generate activity in the economy and get people to spend, in terms of whatever they want to do in business," Mr Whiteside said.
The Reserve Bank of Fiji introduced the OPR, a market-based monetary policy framework in May, 2010.
The OPR was initially set at 3 per cent in 2010 and has been kept at 0.5 per cent for the last 11 months.
A reduction of the OPR means the RBF wants commercial banks to lower lending rates and thus encourage lending and investment.
On the other hand, an increase is to discourage borrowing, so there is less investment to curb demand, growth and inflation.
In the latest economic review, the RBF revealed that new lending for investment purposes registered a year-on-year growth of 12 per cent ($5.8 million) in the year to July.
In addition, the number of building permits issued in the first quarter of the year rose by 14.7 per cent to 344, valued at $43.5 million, while the total value of work put in place by the construction sector increased annually by 7.5 per cent to $68.0 million.
However, liquidity levels in the banking system was $581.8million on September 6 while it was $527.5m.