The Bank of Mauritius (BoM) has introduced a new Monetary Policy Framework (MPF) in an effort to address the shortcomings in the former one as well as create a framework that is aligned with shifting economic and financial conditions. In the same wavelength, the Key Rate – which is replacing the Key Repo Rate – will rely on the interest rate channel to manoeuvre economic uncertainties through the implementation of strategic monetary policy instruments, such as:

• a well-defined and flexible inflation target;

• prominent role for inflation forecasts as intermediate targets;

• review of the operational target;

• greater clarity on the foreign exchange and money markets nexus; and

• appropriate institutional design for different aspects of the monetary policy decision-making process.

This new MPF will seek to provide a more conducive environment for the BoM to have better control on inflation and mitigate fluctuations in price – an occurrence which remains their main concern.

The BoM has currently set the Key Rate at 4.50%. The new Monetary Policy framework came into force on 16 January 2023 and supersedes the former one set up in December 2006.

Access the official communique from the BoM here for more information on the implications of this new framework.