Monday, November 29, 2010

RBF cuts interest rate by half per cent

Sai's Comments:
  • I wonder why Sada Reddy is not around to make this announcement? Then again, he is probably watching this from the comfort of his Auckland home in New Zealand, having fleeced the people of Fiji of untold amount of money during his tenure as RBF boss.

  • Robin Yarrow is not even near anything to be credible as a central bank spokesperson. Otherwise he would have been honest with the truth and say that, among all things, a stable political climate is the best factor that will be conducive for investment in Fiji. That is what Fiji does not have.

  • Just look at the departure of Fiji Water among the businesses now planning to remove their operations from Fiji.

  • Reducing overnight rates will have a negligible effect if the overall political climate is one of suspicion and intimidation by an illegal regime that is economically illeterate. Fiji is the loser for having such a regime and one prays the time will soon come for their removal.

Fiji Live News -  29 November 2010

Fiji’s Reserve Bank has slashed interest rates by 0.5 per cent to 2.5 per cent in view in the hope of stimulating the weak domestic economy.

“Considering the weak recovery in the domestic economy and the favourable outlook for foreign reserves and inflation, a reduction in the overnight policy rate (from 3 per cent) is appropriate,” Reserve Bank acting chairman, Robin Yarrow said in a statement. 

He said investment activity remains subdued as evident from lower imports of investment goods and modest increases in new investment lending by banks. 

Yarrow said the positive growth outlook in major trading partners augurs well for Fiji’s exports and tourism.

He said recent indicators suggest the non-sugar export sector and the tourism industry “are performing remarkably well, supported by favourable commodity prices and improved external demand.

“However, these are partly offset by contractions in sectors such as the agriculture and transport, storage and communications sectors as well as lower than expected positive contributions from others including the manufacturing and 
wholesale & retail sectors. 

There has been a pickup in consumption spending from last year’s levels, supported by a slight growth in lending and strong inflows of personal remittances. 

Yarrow said the forecast for foreign reserves remains positive, driven by higher than expected export earnings and tourism receipts and reduced import demand this year. 

“Against this background, a reduction in the OPR will help stimulate demand by reducing the cost borrowing and facilitating an interest rate environment more conducive for investment.”

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