Considering the monthly change in the indicators, slightly lower remittances, deteriorating labor market indicators, and the comfortable level of foreign reserves, the level of deflation, and excess liquidity in the banking system, the negative economic growth outlook has not changed and the Reserve Bank’s monetary policy stance remains accomodative. At the same time, the Reserve Bank is monitoring the emerging risks prompted by the prolonged state of global pandemic that can impact economic growth and potentially impair financial stability. As such, the Reserve Bank remains vigilant in its regulatory and supervisory roles to ensure financial stability is maintained, while at the same time mitigate the economic downturn and support recovery.

The comfortable level of foreign reserves, the low levels of inflation, and excess liquidity in the banking system, the Reserve Bank’s monetary policy stance remains unchanged. The accommodative policy stance will continue to support domestic activities and macroeconomic growth. However, the Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for early signs of vulnerability. In addition to its financial contribution to the fiscal stimulus package, the Reserve Bank is also exploring other measures to support the economy during this difficult time.

The Reserve Bank projects an economic downturn for 2019/20 financial year as well as the 2020/21 financial year. Although based on the available data to date, the contraction in the economy for 2019/20 is lower than previously anticipated. However, extreme uncertainties regarding the duration of the COVID-19 pandemic remains a downside risk to the projections. Nevertheless, the Reserve Bank still expects foreign reserve levels to remain comfortable above the Reserve Bank’s minimum of 3 months. Furthermore, the Reserve Bank forecast inflation rate to remain below the reference rate of 5%. The banking system is expected to remain sound supported by high liquidity and lower risk of overheating. Given the latest development and outlook, the Monetary policy stance remains accommodative in support of domestic activities, macroeconomic growth, and to mitigate the impacts of COVID-19 on the economy. However, the Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for early signs of vulnerability in the financial system and stands ready to adjust its monetary policy setting if required.

The impact of TC Harold, and the border remaining closed until September 2020, the Reserve Bank still projects an economic downturn in 2019/20. This is likely to continue on to 2020/21 depending on the duration of the COVID-19 pandemic. On the outlook for the near term, foreign reserves is expected to remain at sufficient levels above the minimum of 3 months of import cover, sustained by the inflow of budget support and other relief funds from donor partners. Inflation is forecasted to gradually pick up yet remain below the Reserve Bank’s reference rate of 5%. The banking system is still expected to remain sound with a slowdown in credit growth. New taxes and duties for the new fiscal year 2020/21, global shocks, and heightened uncertainties from COVID-19 are risks to the outlook. Monetary policy stance remains accommodative in support of domestic activities, macroeconomic growth, and mitigating the impacts of COVID-19 on the economy. The Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for any vulnerability in the financial system and stands ready to adjust its monetary policy setting if required.

The impact of TC Harold, and the border remains closed until mid-June, the Reserve Bank is projecting an economic downturn for Tonga in 2019/20. This may continue to 2020/21 depending on the duration of the COVID-19 pandemic. On the outlook for June 2020, foreign reserves is expected to remain at sufficient levels above the minimum of 3 months of import cover, sustained by the inflow of budget support and other relief funds from donor partners. Inflation is forecasted to gradually pick up yet remain below the Reserve Bank’s reference rate of 5%. The banking system is still expected to remain sound with a slowdown in credit growth. Monetary policy stance remains accommodative in support of domestic activities, macroeconomic growth, and mitigating the impacts of COVID-19 on the economy. The Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for any sign of vulnerability and stands ready to adjust its monetary policy setting if required.

The impact of TC Harold, and the border remains closed until mid-June, the Reserve Bank is projecting an economic downturn for Tonga in 2019/20. This may continue to 2020/21 depending on the duration of the COVID-19 pandemic. On the outlook for June 2020, foreign reserves is expected to remain at sufficient levels above the minimum of 3 months of import cover, sustained by the inflow of budget support and other relief funds from donor partners. Inflation is forecasted to gradually pick up yet remain below the Reserve Bank’s reference rate of 5%. The banking system is still expected to remain sound with a slowdown in credit growth. Monetary policy stance remains accommodative in support of domestic activities, macroeconomic growth, and mitigating the impacts of COVID-19 on the economy. The Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for any sign of vulnerability and stands ready to adjust its monetary policy setting if required.

The Reserve Bank projects the foreign reserves to remain at sufficient levels above the minimum of 3 months of import cover sustained by expected receipts of budget support. Inflation is forecasted to stay below the Reserve Bank’s reference rate of 5% as global oil prices are expected to fall and partially offset the expected increases on other imported goods. Meanwhile, credit growth is projected to continue at a slower pace. The Reserve Bank maintains its accomodative monetary policy stance for the near to medium term. Additional measures have been put in place to assist the Government and the commercial banks in their economic relief efforts through moratorioums and encouraging the utilization of the excess liquidity in the banking system to support economic activities and growth. The Reserve Bank remains vigilant by closely monitoring developments of COVID-19 in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.

The Reserve Bank estimates the foreign reserves to remain at sufficient levels above the minimum of 3 months of import cover. Inflation is forecasted to stay below the Reserve Bank’s reference rate of 5% as global oil prices are expected to fall and partially offset the expected increases on other imported goods. Credit growth is also projected to slow down eventually. In light of the recent developments, the Reserve Bank maintains its accommodative monetary policy stance at this time to encourage the utilization of the excess liquidity in the banking system for further lending to support economic activities and growth. The Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.

The Reserve Bank maintains its accommodative monetary policy stance at this time to encourage the utilization of the excess liquidity in the banking system for further lending to support economic activities and growth. The Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.

The Reserve Bank expects a general slowdown in domestic economic activity for the medium term. Foreign reserves are projected to remain at comfortable levels above the minimum of 3 months of import cover. The inflation rate is forecast to remain relatively low yet stable and below the Reserve Bank’s reference rate of 5%. Credit growth will continue to grow albeit at a slower pace, underpinned by excess liquidity in the banking system. The Reserve Bank, therefore, maintains its accommodative monetary policy stance to encourage the utilization of the excess liquidity in the banking system for further lending to support economic activities. Nonetheless, the Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.