The Bank of Papua New Guinea’s Monetary Policy Committee (MPC) left the Kina Facility Rate (KFR) unchanged at 5.0 percent at its 3 March 2026 meeting, judging the current stance as sufficiently supportive of a still-subdued non-mineral economy while keeping inflation near target amid contained domestic price pressures and heightened global uncertainty from escalating Middle-East conflict. The decision extends a steady policy path that has seen the KFR held at 5.0 percent since a 100 bp hike in September 2025. Operational settings were left intact: the cash reserve requirement remains 9.0 percent, repo and reverse-repo margins stay 200 bp above/below the KFR, and 7-day fixed-rate full-allotment and 28-day central bank bills as well as weekly FX auctions continue under the crawl-like exchange-rate regime that serves as the primary nominal anchor. Headline CPI is projected around 4.0 percent, with core inflation easing toward 2.5–3.0 percent, while output growth is described as moderate, underpinned by near-capacity production at Porgera but muted non-mineral activity. The MPC acknowledged persistent foreign-exchange order backlogs and agreed that further measured Kina depreciation is needed to address the currency’s estimated overvaluation and support external balance. It noted resilient global growth and easing worldwide inflation but flagged risks from higher energy and shipping costs linked to regional hostilities. The Committee pledged close monitoring of geopolitical and d
Bank of Papua New Guinea 2026-03-02
Bank of Papua New Guinea keeps Kina Facility Rate unchanged at 5.0%
Bank of Papua New Guinea’s Monetary Policy Committee on 3 March kept the Kina Facility Rate at 5.0 percent—unchanged since a 100 bp hike in Sept 2025—alongside an unchanged 9 percent cash-reserve ratio, 200 bp repo corridor and existing FX auction regime. Citing moderate growth, subdued non-mineral activity and contained inflation (headline ~4 percent, core 2.5–3.0 percent), the MPC highlighted persistent FX backlogs and the need for further gradual Kina depreciation while pledging vigilance amid Middle-East-related external risks.