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New Monetary Policy Framework Is Already Giving Positive Results Regarding Excess Liquidity And Inflation

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Mr Harvesh Kumar Seegolam, Governor of the Bank of Mauritius, had an interactive session with the press yesterday to discuss the developments pertaining to the New Monetary Policy Framework that was introduced in January 2023. According to the Governor, some of the targets set have been attained. For instance, the main target of removing the excess liquidity in the country has been attained with the 7-Day BoM Bill, issued every Friday at the “Key Rate”. This ensures that the amount of liquidity remaining in the system is in line with the demand for reserve money by banks, thus helping to anchor short-term money market rates at around the “Key Rate”. Banks have been able clear their excess liquidity or shortage of liquidity using the Overnight Deposit Facility (ODF).

The deposit rate of 3.2 % remain attractive, and saving is on an increasing curve, and fixed deposit approaches 4.5 %. This reflects banking sector, which is very good. Our banking is robust, resilient, sound and thriving the health of the

Global inflation is set to fall from 8.8 % in 2022 (annual average) to 6.6 % in 2023 and 4.3 % in 2024––above pre-pandemic (2017–19) levels of about 3.5 %.

The Bank of Mauritius is also working on a dedicated Cyber Risk & Attack guideline. A committee has been set up to that issue, and consultation with the IMF is also sought. The aim is to minimize risk and cyber-attacks. Up to now, we have been very cautious, but we still need to reinforce our system of surveillance. This guideline is largely based on the guidance on Cyber Resilience Oversight Expectations for financial market infrastructures issued by the European Central Bank in December 2018.

Commercial banks ready to  help households in the lower income bracket

The Bank of Mauritius is pleased to announce that some commercial banks have approached the regulator with a plan to help households in the lower income bracket through this time of high interest and inflation. Households within lower than Rs 100 000 a month with loan Rs 2 million or less will benefit from interest key rate plus or minus 100 basis points.  The commercial banks are doing this to help that households (some 36000) in financial stress. The commercial banks will expose their plans to the public shortly.

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