The Central Bank of Solomon Islands currently intends to pursue a moderately accommodative strategy. Conditions in the economy remain tight and with both price rises and inflationary pressures low the Bank will continue to maintain an underlying stance of monetary easing.

The MPC has based this decision on a number of factors. Inflation has been brought in to line with Bank targets and at this point is very low. The Bank does not envisage a rapid return to high levels of inflation in the long run, given the weaknesses in both the domestic and global economies. Reserve levels are high and the Bank does not perceive any major threat to their level across the short to medium run. The Bank therefore feels easing to be appropriate at this time.

The Bank will however be vigilant in monitoring possible inflationary developments in the economy and stands ready to moderate the degree of accommodativeness were the conditions to alter. In particular the Bank stands ready to wind down the liquidity position if this becomes a threat to price stability. The ample level of liquidity already present in the market also means that moves to loosen by the Bank will not be aggressive at this time but could become more expansionary if market conditions see further deterioration.

From this section of the site, you can download the complete Monetary Policy Statement for 2010 (10 pages, 408KB).

Updated on: Wed, Apr 2010 at 05:35