GIS - 15 July, 2014: The Key Repo Rate has been maintained at 4.65 per cent per annum by the Monetary Policy Committee (MPC) of the Bank of Mauritius following its meeting held yesterday in Port Louis.
The MPC took this decision taking into consideration other alternative interest rate scenarios as well as after weighing the risks to the growth and inflation outlook against the backdrop of subdued global and domestic inflationary pressures.
On the domestic front, the Committee observed that the economy which slowed down in the first quarter of 2014 is projected to pick up during the second half of the year in line with improving economic conditions in main trading-partner countries. In light of latest developments in the real economy, the MPC forecast growth is revised downwards for 2014 within a range of 3.4-3.6 per cent.
The MPC further noted that year-on-year inflation has declined from 4.5 per cent in March 2014 to 3.3 per cent in June 2014, mainly on account of a moderation in food prices, especially fresh vegetables, and stability in energy prices.
The Committee foresees maintaining this monetary policy stance up to the end of 2014 on the assumption that headline inflation will stay at or below 4 per cent and year-on-year inflation at or below 3.5 per cent, leaving aside unexpected supply shocks. The MPC will meet to review its stance in case of unexpected price and real sector developments.
Regarding the global economy, the MPC observed that world economic activity had continued to strengthen since the April 2014 MPC meeting although the extent of the recovery is still uncertain and uneven across main trading partners. While the United States and United Kingdom economies are recovering relatively strongly, the MPC noted that prospects for the Eurozone and emerging market economies remained sluggish. Global inflation has remained muted given the moderate evolution of commodity and energy prices, it concluded.
In the light of the above scenario, the MPC continues to maintain strong vigilance in monitoring the economic and financial developments and remains ready to intervene if the need arises.
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