The Bank of Papua New Guinea’s Monetary Policy Committee maintained the Kina Facility Rate (KFR) at 5.0% in September 2026, judging current settings appropriate given uneven sectoral growth and no clear evidence that higher inflation was becoming persistent. The KFR has remained at 5.0% since a 100-basis-point increase in September 2025. The Committee also held the Cash Reserve Requirement at 9.0% and maintained the current pace of Kina adjustment under the crawl-like exchange rate arrangement, reaffirming the exchange rate as the principal inflation anchor amid weak interest-rate transmission. Headline inflation rose to 5.3% in the June quarter, prompting the central bank to raise its 2026 forecast to 5.0%, while projected real GDP growth was upgraded to 3.5% on stronger mineral, construction and services activity. Foreign exchange conditions continued to improve, with a smaller order backlog, net reserve accumulation and adequate reserves. The global outlook softened as higher energy and commodity prices increased imported-inflation risks, while El Nino posed downside risks to domestic activity. The Committee signalled that a broader and more sustained increase in underlying inflation would warrant reassessing policy settings.
2026-09-07Bank of Papua New Guinea
Bank of Papua New Guinea Maintains Kina Facility Rate at 5.0%
The Bank of Papua New Guinea maintained the Kina Facility Rate at 5.0%, the Cash Reserve Requirement at 9.0%, and the current pace of Kina adjustment, judging settings appropriate despite headline inflation reaching 5.3% in the June quarter. It raised its 2026 inflation and real GDP growth forecasts to 5.0% and 3.5%, respectively, and said a broader, sustained rise in underlying inflation would prompt a policy reassessment.