SUVA – Fiji’s central bank has decided to reduce the Overnight Policy Rate (OPR) from 1.5 per cent to 0.5 per cent. Reserve Bank of Fiji acting chairman of the board Deo Saran said the reduction in OPR should provide further impetus for investment and fuel private sector demand needed to support economic growth.
“The weaker outlook on global and domestic growth warrants such a move, particularly at this juncture where foreign reserves levels are comfortable and the outlook is stable, while inflation is expected to moderate over the coming months,” he said.
Mr Saran said the developments in the global economy entered a more precarious phase with greater uncertainty and financial volatility.
Consequently, Mr Saran said the downward revision in global growth to 4.0 per cent for both 2011 and 2012 would have implications for Fiji via its impact on major trading partner economies.
On the domestic front, Mr Saran said the board noted the performance of the real sector was mixed. “The buoyancy in visitor arrivals continued in July, consistent with the tourism peak season,” he said.
“Some improvements were noted in cane and sugar production in the cumulative to September period, while the decline in gold production was compensated by the prevailing high world gold prices in the same period.
“However, the lower electricity consumption and production is indicative of the persisting lull in industrial production. In addition, consumption spending remains modest in line with slow growth in private sector credit, while investment activity remains soft.”
