GIS - September 26, 2012: The Key Repo Rate has been maintained at 4.9 percent per annum following a meeting of the Monetary Policy Committee (MPC) of the Bank of Mauritius which was held on 24 September 2012.
The MPC took this decision so as to remain cautious on the monetary policy front given the following factors. They include the prevailing uncertainties in the global economy, the continuing negative real rate interest on savings deposits in the country and the rising corporate indebtedness.
Despite the global economic downturn combined with the euro area debt crisis, the Committee pointed out that domestic economy has continued to show resilience although some of the economic activities have slowed down. As a result of the downside risks identified at the last meeting of the Committee in June 2012, which have to a large extent materialised, economic growth is now projected at 3.3 percent as compared to 3.8 percent as forecasted earlier.
Moreover, the MPC observed that upside risks to the domestic inflation outlook have risen, partly reflecting higher global food and energy prices. According to the Committee the domestic inflationary outlook can be affected by various factors. Amongst them are the recent rupee depreciation, public sector wage increases expected from the forthcoming Pay Research Bureau salary review, the possible upward pull of the PRB award on the private sector wage bill and the expected adjustment in retail petroleum prices.
In the light of this scenario, the MPC continues to maintain strong vigilance in monitoring the economic and financial developments and remains ready to intervene if the need arises.