GIS - 29 October, 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 on Monday 27 October in Port Louis.
The MPC took this decision after weighing the risks to the growth and inflation outlook taking into consideration the economic resilience in particular, owing to a bounce back of the GDP growth to 4.6 per cent in the second quarter of 2014 and unchanged domestic economic conditions since the previous MPC meeting.
However, according to the committee, investment, productivity, competitiveness and the current account deficit remained matters of concern. Discussions were also raised on interest rate normalisation to mitigate risks to financial stability and to address the issue of low domestic savings rate, but the MPC has agreed that the timing of such an approach would depend on future price and real sector developments.
The MPC further observed that the domestic economy has rebounded in the second quarter of 2014 with a pick-up in growth in the main sectors of the economy. It also noted that the underlying growth momentum is projected to remain positive during the second semester of the year. Staff maintained the growth forecast for 2014 in a range of 3.4 to 3.6 per cent.
Concurrently, the MPC noted that year-on-year inflation has declined, from 3.3 per cent in June 2014 to 2.9 per cent in September 2014, mainly attributed to subsiding food and transport inflation. Bank staff forecasted year-on-year inflation is estimated at about 3.0 per cent for December 2014.
As for the global economy, the MPC observed that as projected in the International Monetary Fund’s October 2014 World Economic Outlook, the economy would recover from 3.3 per cent in 2014 to 3.8 per cent in 2015 but growth would remain uneven across various countries and regions. Growth is projected to remain strong in the US and UK while in the Eurozone, the recovery is expected to be weak, observed the Committee.
Economic activity is projected to strengthen in several emerging market economies while the global inflation environment is projected to remain benign amidst declining international oil and food prices.
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.
Government Information Service, Prime Minister’s Office, Level 6, New Government Centre, Port Louis, Mauritius. Email: firstname.lastname@example.org Website: http://gis.gov.mu