Solomon Islands central bank maintains accommodative policy, sets new rate

The Central Bank of Solomon Islands (CBSI) Board unanimously decided to maintain an accommodative monetary policy stance for the next six months.

This decision aims to support economic growth while closely monitoring inflation and emerging risks.

As part of this, the CBSI introduced a new policy rate set at 1.5 percent, marking an initial step towards modernizing its monetary policy framework.

This rate will serve as the Bank's primary tool to signal the market, guiding interest rates across the economy and influencing money supply.

The CBSI will now establish the necessary systems for its effective implementation, including arrangements for remunerating commercial bank cash reserves.

This new policy rate complements existing tools, strengthening the overall framework to maintain price stability.

The global economy showed resilience in 2025, with the IMF projecting 3.3 percent growth for 2026 and global inflation nearing targets.

Domestically, the Solomon Islands economy grew 3.6 percent in 2025, surpassing expectations, driven by exports and public infrastructure.

Growth is projected at 3.8 percent for 2026.

Headline inflation fell sharply to 1.6 percent by December 2025 due to improved supply and lower imported costs.

Despite a temporary Q1 2026 rise from weather, inflation is expected to reach 3.4 percent by year-end, with core inflation remaining low.