Bank of Mauritius: Mauritius to maintain its Key Repo Rate at 4.65% per annum
Economic activity is projected to strengthen in several emerging market economies, where the global inflation environment is projected to remain favorable with decline in international oil and food prices.(Image: IHEML)
The Monetary Policy Committee (MPC) of the Bank of Mauritius (BoM) has decided to maintain the Key Repo Rate (KRR) at 4.65% per annum at its meeting yesterday October 27, 2014, according to the central bank’s communiqué.
With focus on the KRR, the meeting had the presence of Rundheersing Bheenick, governor of BoM; Yandranuth Googoolye, First Deputy Governor; Issa Soormally, Second Deputy Governor; and external members of the committee namely Nishan Degnarain, Pierre Dinan, and Hemraz Oopuddhye Jankee, Professeur Jeffrey Frankel and Professeur Silvana Tenreyro.
The global economy is expected to improve from 3.3% in 2014 to 3.8% in 2015, as anticipated in the IMF’s October 2014 World Economic Outlook, but growth would stay unbalanced across various countries and regions, the MPC noted.
Although the global economy recovery is expected to be weak in the Eurozone, the United States and United Kingdom might not be affected as growth is anticipated to remain strong.
In several emerging market economies, economic activity is expected to reinforce while the global inflation environment is predicted to remain.
Economic activity is projected to strengthen in several emerging market economies, where the global inflation environment is projected to remain favorable with decline in international oil and food prices.
In the second quarter of 2014, the Mauritian economy recovered, as growth picked up in key sectors.
As the underlying growth momentum is projected to remain positive during the second semester of the year, the growth forecast for 2014 is maintained in a range of 3.4% to 3.6%.
Further to the decline perceived in the year-on-year inflation caused by a drop in food and transport inflation, the members anticipated a year-on-year inflation at about 3.0% for December 2014.
During the first half of 2014, the economy indicated resilience, achieving 4.6% GDP growth in second quarter of 2014. Domestic economic conditions were broadly unchanged from the previous MPC meeting, according to the MPC members.
Hence, investment, productivity, competitiveness and the current account deficit remain matters of concern.
Concerning interest rate normalisation, some members raised discussions on the topic in order to alleviate risks to financial stability and to address the issue of low domestic savings rate.
On the other hand, they agreed that this approach would lean on future price and real sector developments.
The communiqué ended with the note that the MPC continues to observe economic and financial developments and is in readiness to meet in between its regular meetings, if the need arises.
Besides, the Minutes of the MPC’s meeting will be published on Monday November10, 2014.