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Wednesday, April 04, 2007

Reaction to Reserve Bank of Fiji's Policy Announcement

I will be posting some comments on the most recent policy announcements by the Reserve Bank of Fiji later, but here are some from Westpac and a Think Tank that is working for the Interim Government, taken from the Fiji Times today.

"Bank cuts lending rates, Wednesday, April 04, 2007

THE Westpac Banking Corporation has announced it will reduce lending rates by 0.5 per cent, effective from May 1.

The reduction reflects the improved liquidity situation that has followed since the introduction of the credit ceiling by the Reserve Bank of Fiji on November 30 last year, the bank said.

Bank general manager John Cashmore said Westpac welcomed the Reserve Bank of Fiji's announcement on Friday of a reduction in the Statutory Reserve Deposit requirement from 7 per cent of deposits to 6 per cent.

"As a result of the reduction, Westpac is pleased to announce that we will decrease our base business and consumer lending rates by 0.5 per cent effective May 1, 2007," he said.

Mr Cashmore said the credit ceiling by RBF had been effective in reducing the demand for wholesale funds.

"With this reduction, we feel that we are now able to pass these savings on to our valued customers," he said.

Mr Cashmore said the bank would continue to monitor the impact on the cost of funds and any further easing of market rates, "will allow Westpac to pass on these savings to their customers in due course".

"Westpac is committed to the continual review of our products and services to ensure that our customers can access the best deals possible," he said.

Westpac had decided to decrease interest rates after the announcement by RBF that it had increased the official interest rate from 3.25 per cent per annum to 4.25 per cent per annum.

The RBF announced it had left official interest rates unchanged but had introduced policies that "will provide some leeway to commercial banks to re-look at their interest rates offered to customers"."

"RBF faces criticism, Wednesday, April 04, 2007

THE decision by the Reserve Bank of Fiji to implement policies to safeguard the country's balance of payment has been criticised by a group of interim Government supporters.

The group, known as the Think Tank for pro-interim Government Supporters, accused the bank of "incompetence".

"Now that we have a falling economy, depleted foreign reserves and a currency under pressure, the RBF has woken up to the fact that foreign-owned companies that borrow locally have been partly a cause of the economic problems we now face," group spokesman Fred Caine said.

"Under its enabling Act RBF is chartered with ensuring financial stability for the wellbeing of the citizens of Fiji. I'm afraid they have not done this job well enough."

A statement from the bank last week said the decision to implement the policies to safeguard the balance of payment was made against a backdrop of a contracting economy, failing investment, inflation edging upward, under performance of exports, a widening trade deficit and declining foreign reserves."

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