GIS - 14 March, 2013: The Key Repo Rate has been maintained at 4.9 per cent per annum following a meeting of the Monetary Policy Committee (MPC) of the Bank of Mauritius held on 11 March 2013.
The MPC took this decision so as to remain cautious on the monetary policy front in the wake of the continued uncertainty prevailing on the global growth outlook and after taking into consideration alternative interest rate scenarios as well as developments in monetary policy across the world.
On the domestic front, the Committee highlighted that growth has picked up slightly given that some key sectors of the economy have registered positive growth. The MPC further observed that though the output gap has narrowed nevertheless it continues to be negative while the underlying economic momentum is expected to remain positive with a forecast 2013 growth rate within the range of 3.4 to 3.9 per cent. However, the Committee noted important downside risks, stemming mainly from weak and uncertain economic conditions in main export markets which will continue to weigh on the domestic growth outlook.
Regarding the year-on-year inflation, the MPC noted that there has been a rise to 3.6 per cent in February 2013, from 2.9 per cent in January 2013. The Committee added that upside risks to the inflation outlook will persist as a result of elevated global commodity prices, the impact of the recent PRB award to the public sector, the recent increase in retail petroleum prices and the expected second-round effects of these increases, as well as the projected rise in administered prices.
As regards the global economy, the MPC pointed out that economic conditions among developed economies of export interest to Mauritius have remained fragile since the November 2012 MPC meeting. According to the Committee, downside risks from a prolonged recession in the euro area and uncertainty about the US fiscal situation are still significant while recovery is more robust among emerging economies.
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.