The Reserve Bank of Fiji (RBF) Board will maintain the overnight policy rate at 0.25 per cent.
This, according to a statement from RBF governor and board chairman Ariff Ali, who said the decision to maintain an accommodative stance was based on the current economic environment and the outlook for the twin monetary policy objectives of the RBF.
He said the relatively stronger yet divergent economic recovery anticipated for the global economy for this year and next was projected by the International Monetary Fund (IMF) in its April World Economic Outlook report.
Mr Ali added the risks to the global economy would remain, with policy advice from the IMF to focus on prioritising healthcare spending, maintaining targeted fiscal support and accommodative monetary policy while tracking financial stability risks.
It was stated the domestic economic activity remained weak because of the lacklustre output in key sectors and a contraction in consumption as well as investment activity.
Weak labour market conditions were stated to persist with ongoing support from the Fiji National Provident Fund and the Government via the COVID-19 unemployment scheme.
The RBF stated subdued real economic conditions were corroborated by financial sector activity, where lending to the private sector contracted because of reduced lending to both households and private sector business entities.
As of April 28, liquidity levels in the banking system remained high at $1497.6 million and interest rates remained relatively lower over the year, according to the bank.
It was mentioned over 50,000 people had received the first dose of the AstraZeneca COVID-19 vaccine and the 26,000 doses which just arrived in the country were positive developments.
Although with recent local transmission cases and containment measures imposed locally, it added to the near-term economic uncertainty which would likely delay the resumption of tourist activity.
The governor said RBF’s twin monetary policy objectives of stable inflation and adequate foreign reserves remained intact as headline inflation returned to negative territory (-1.2 per cent) in March, underlined by lower food, alcohol and yaqona prices.
In the near-term, inflationary pressures were expected to stem from increases in crude oil and global food prices, coupled with potential weather-related shocks, according to the bank.
Foreign reserve levels were stated to be assessed as adequate and, as of April 29, it stood at $2781.6 million, sufficient to cover 8.6 months and supported by a drawdown of external loans and lower import payments.
Governor Ali said the RBF would continue to monitor international and domestic economic developments as well as align monetary policy accordingly.
