Bank of Mauritius keeps interest rates unchanged at 4.5%

The Bank of Mauritius (B.O.M) recently announced its decision to maintain the key repo rate at 4.5%. This marks the first time of stability following 5 consecutive rate hikes dating back to March 2022.

BOM explained its decision by highlighting the challenging economic landscape but also alluded to signs of a global recovery through economic indicators like the Purchasing Managers Indices (PMIs). The Bank of Mauritius continued by highlighting the domestic economy of the country gained momentum throughout 2022 with key sectors such as tourism, services and manufacturing showing improvement and total economic growth of 8.7%. Additionally there has been sustained foreign direct investment in real estate, supporting global cross-border investment activities. 

At the onset of the global pandemic The Monetary Policy committee reduced the repo rate to 2.85% in response, shortly followed by another reduction to the low of 1.85%. However, since March 2022 BOM followed through with 5 consecutive rate hikes to the current level which is the highest rate Mauritius has seen since 2015 and currently remains higher than pre-pandemic levels. 

It remains to be seen when the Monetary Policy Committee will initiate a reverse and reduce the rate to normalized levels once again in its quest to tame headline inflation which is forecasted at 6.8% for 2023.