MONETARY POLICY STANCE FOR FY2024/2025

At its meeting on the 28th ofJune 2024, the Central Bank of Samoa (CBS) Board of Directors approved the
continuation of the Central Bank’s monetary policy for FY2024/2025 to bring down the elevated level of
excess liquidity in the financial system. In addition, the CBS will also maintain its efforts to normalise or
adjust upwards its official interest rate.
The monetary policy stance will support the 6.7 percent real economic growth forecast for the year
ending June 2025, further to the estimated 10.6 percent expansion by June 2024. This economic outlook
reflects the positive effects envisaged from the hosting of the Commonwealth Heads of Government
Meeting (CHOGM), the implementation of various new and ongoing Government projects in addition to
further positive business activities associated with high tourism, remittances, and export proceeds. On
the other hand, the presence of downside risks from ongoing international geopolitical tensions, modest
growth in our major trading partners and our vulnerability to adverse weather conditions are high,
which could impact this outlook.
The decreasing headline inflation rate to date is estimated to continue to 3.6 percent by June 2024 and
will moderate to around 3.8 percent by June 2025. This is because of modest gains forecast by market
surveyors for international oil and meat prices as well as strong domestic spending to be expected. Our
vulnerability, however, to natural disasters and any adverse and unexpected global developments in the
international commodity markets continues to pose a risk to our inflation projections.
The country’s external sector will continue to remain strong in FY2024/2025, with official foreign
reserves projected to be above $1.4 billion (at an equivalent of 13.5 months of import of goods only).
This is more than sufficient to meet the country’s international commitments. Increased inflows from
tourism and private remittances together with further inflow of capital aid funds will drive this strong
position over the coming year.
The financial system continues to be sound and stable, with ample banking system liquidity currently at
a high of $717.1 million. The average bank lending rates are low and will remain below 9.0 percent over
the near term.
With this outlook, ongoing collaboration and discussions with the financial sector are important in the
Bank’s efforts to support economic growth and maintain low inflation rates.
The Central Bank will continue to monitor and revisit its monetary policy decision should economic and
financial conditions change over the next twelve months.