Aerial shot of Suva. [File Photo]
Liquidity stands at $2.4 billion as of yesterday and the Fijian Reserve Bank says this also pushed the banks’ weighted average lending rate to historic lows.
However, the bank is cautioning Fijians that persistently high inflation across the globe has raised the risks of stagflation in the world economy and may potentially dampen the domestic economic recovery to some extent.
Recently the US markets have crashed drastically with highest ever interest rates seen in recent years.
This is the same in many other bigger nations around the world.
RBF Governor and Board Chair, Ariff Ali says overnight policy rate also remains unchanged at 0.25 percent.
A reduction in the OPR signifies an easing of monetary policy while an increase in the OPR signals a tightening of monetary policy.
The central bank adds that the strong recovery in the tourism industry currently underway has boosted aggregate demand.
This it says has resulted in the revised economy growth now projected at 12.4 percent for 2022.
It says that partial indicators of consumption and investment spending are noting annual gains along with higher public spending
RBF survey and industry data also point to the continuing recovery in the labour market, evident by increased jobs advertised and a steady rise in recruitment in major sectors.”
Ali says that the latest outturn in the financial sector also supports the recovery, as higher lending by commercial banks and other financial institutions drove the 2.6 percent growth in private sector credit in the year to May.
The trade deficit widened by 59.6 percent in the first quarter as imports growth outpaced exports performance.
Against the backdrop of high energy and food prices, the trade deficit will likely deteriorate further this year due to higher imports.
However, this will be partly offset by the strong performance in personal remittances and tourism receipts, which are anticipated to grow further moving forward.
Ali says that the inflation dynamics continue to be influenced by higher imported inflation which contributed most to the annual headline inflation of five percent in May.
Despite the recent uptick in imports, foreign reserves remain adequate at over $3.4 billion as of today, sufficient to cover 7.9 months of retained imports.