The monetary policy committee met on Wednesday, December 15, 2021 at the Bank of Mauritius. It was decided to keep the main policy rate of the central bank unchanged at 1.85% per annum. This decision was taken unanimously.
The Bank of Mauritius has lowered its forecast for the growth rate of the Mauritian economy. The growth rate in 2021 is now estimated at 5%, instead of the 5.5% forecast in October 2021. “The emergence of the Omicron variant has brought some uncertainty to the tourism sector,” the central bank noted in a statement. Nevertheless, the committee points out that the full reopening of borders and the ongoing vaccination campaign, including the administration of booster doses, are improving confidence in the economy. This is strengthening the economic recovery.
Other areas of economic activity have also improved, as evidenced by household credit growth -which accelerated in the third quarter- and the liquidity and solvency positions of commercial banks -which remained strong.
According to the OECD (Organization for Economic Cooperation and Development), which just published its Economic Outlook Report in December 2021, the economic growth rate should be 5.6% in 2021, and 4.5% in 2022. This is provided that travel restrictions are fully lifted and that monetary policies support economic growth in developed countries, the report said.
The inflation rate projected by the Bank of Mauritius in 2021 will have to be within the acceptable range, i.e. around 4.0%, compared with 3.8% projected in October 2021. Indeed, while supply-side disruptions and rising commodity demand continue to influence global inflation, these supply-side influences are expected to diminish over the medium term. In Mauritius, inflation remains influenced by these external supply shocks, including increases in commodity prices, transportation costs, and food prices. In the absence of any other exogenous shocks, the Bank expects headline inflation to be around 4.0 percent for 2021, which remains within an acceptable range based on historical data.
