GIS - 10 February, 2014: The Key Repo Rate has been maintained at 4.65 per cent per annum following a meeting of the Monetary Policy Committee (MPC) of the Bank of Mauritius held last week in Port Louis.
The MPC took this decision taking into consideration other alternative interest rate scenarios as well as developments in monetary policy across the world so as to remain cautious on the monetary policy front.
On the domestic front, the Committee observed that the economy has continued to show resilience to the global economic outlook. According to the MPC, as global economic activity recovers, GDP growth will pick up in the range of 3.7 to 4.0 per cent for 2014, representing an increase of 0.5 to 0.8 percent above the estimated growth of 3.2 per cent in 2013 by Statistics Mauritius.
The MPC however, noted that year-on-year inflation has risen to 4.0 per cent in December 2013, from 3.1 per cent in August 2013 as core measures of inflation have also increased reflecting underlying inflationary pressures in the economy. Prices of locally produced goods and services had a higher impact on domestic inflation than prices of imported goods and services.
The Committee expressed concerns on the conditions in the banking system, notably from persistently high and growing excess liquidity, and discussed on ways to address those risks while enhancing savings.
As regards the global economy, the MPC observed that the economy has picked up since its September 2013 meeting with recovery in the United States and United Kingdom. Furthermore, the Committee pointed out that though the Euro zone has emerged out of recession, growth is expected to remain weak while emerging market economies will continue to face downside risks, mainly from the US Fed tapering and internal rebalancing in China. Global inflation has eased in advanced economies but has firmed in several emerging countries, 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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