Central Bank of Solomon Islands maintains 1.5% policy rate

The Central Bank of Solomon Islands (CBSI) has decided to maintain its policy rate at 1.5 percent for the next six months. The decision, made during a board meeting on August 28, 2026, comes as the bank monitors rising inflationary pressures.

Headline inflation rose to 4.6 percent in June 2026, a significant increase from 0.4 percent in December 2025. The CBSI attributed this surge primarily to supply-side factors, noting that betel nut prices alone accounted for 2.5 percentage points, or 54 percent, of the overall headline inflation. Other contributors include increased transport and utility costs linked to global oil price fluctuations.

The bank warned that inflation could reach between 5 and 6 percent by the end of 2026. While core inflation is expected to remain below 1 percent due to weak domestic demand, the outlook remains uncertain due to potential risks such as Middle East conflicts, El Niño-related food supply disruptions, and government spending levels. Additionally, the CBSI has revised its 2026 economic growth forecast downward to 3.0 percent from a previous projection of 3.8 percent.