The National Reserve Bank of Tonga (NRBT) has announced measures to strengthen monetary policy and address inflation concerns.
In its February 2025 Monetary Policy Statement, the NRBT announced the introduction of a new policy rate, shifting from a floor rate to a standard mid-rate to provide clearer guidance on overnight interest rates.
The Statutory Reserve Deposit ratio remains at 15%, and the interest rate on banks’ Exchange Settlement Accounts at the Reserve Bank continues at 0%. To manage excess liquidity, the NRBT will issue NRBT Notes.
Governor Tatafu Moeaki emphasized the commitment to modernizing policy instruments, saying, “The new MPS commits to modernizing policy instruments for the NRBT to be more effective in influencing market interest rates and inflation.”
Moeaki also highlighted plans to review the currency basket composition to enhance stability and minimize inflationary pressures. He said that working with the government to achieve macroeconomic stability and address supply-side challenges is key.
The NRBT projects a gradual increase in inflation, remaining below the 5% reference rate in the near term, though risks are tilted to the upside. Positive economic recovery is anticipated to continue into the next fiscal year, providing the NRBT with policy space to manage liquidity and enhance monetary interventions.
According to the International Monetary Fund, Tonga’s inflation rate is projected at 3.2% for 2025, with a real GDP growth forecast of 2.4%.
