- 23 February, 2016:
The Monetary Policy Committee (MPC) of the Bank of Mauritius has maintained the Key Repo Rate at 4.40 per cent per annum at its meeting held last week in Port Louis.
The Committee reached to a decision taking into consideration other alternative interest rate scenarios and after weighing the risks to the growth and inflation outlook as well as different factors in determining the Key Repo Rate.
On the domestic front the Committee observed that the economy grew by 3.7 per cent in the third quarter of 2015, which is slightly above the 3.1 per cent growth registered in the previous quarter and 3.6 per cent in the third quarter of 2014. However, it noted that the economy is still operating below its potential level, reflecting mostly with a slowing down in investment.
The MPC also discussed productivity trends and wage growth in the economy, debt levels and trends in non-performing loans in the banking sector and more importantly, took note of the evolution of excess liquidity in the banking system.
With regard to inflation indicators, it has been observed that inflation has continued to decline since the previous MPC meeting, on the back of low global commodity prices and persistent slack in the domestic economy. Headline inflation decreased from 1.7 per cent in June 2015 to 1.2 per cent in September 2015, and remained contained within 1.2-1.3 per cent range to date.
According to the Committee, headline inflation is projected to rise to around 2.3 per cent in 2016. As for the year-on-year inflation, it dropped from 2.0 per cent in September 2015 to 0.4 per cent in January 2016. The MPC further viewed that domestic inflation would remain quite low in the context of subdued global commodity prices and restrained inflation in major trading partner countries.
On the international front, the MPC took note of IMF’s World Economic Outlook Update of January 2016 whereby global growth was revised down to 3.4 per cent for 2016 that is 0.2 percentage point lower than its October 2015 forecast. The MPC also reviewed recent developments in the world financial markets and acknowledged that risks to the global growth outlook remain tilted on the downside.
In the light of the above scenario, the MPC would continue to monitor the heightened market volatility stemming from geopolitical risks, the rebalancing of growth in China and diverging monetary policies across regions 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: email@example.com Website:http://gis.govmu.org