The next meeting of the Monetary Policy Committee is expected to be held this July. The Key Rate has remained unchanged since December 2022.

The Monetary Policy Committee (MPC) last met on 3 April 2024. At that meeting, the Committee took note of the latest international and domestic developments that have taken place since the last meeting held in November 2023. The MPC noted that despite positive macroeconomic developments, there are nevertheless important risk factors that could affect the outcome in 2024, both from an inflation and growth perspective.

After weighing up the risks to the growth and inflation outlook, the MPC considered that its decision to raise policy rates in 2022 still needed time to have an impact on the economy, firmly anchor inflation expectations and ensure that the inflation target in 2024 is achieved. Members decided that a change in the policy rate was not warranted at this stage, unanimously deciding to keep the policy rate unchanged at 4.50% per annum.

What to expect at the 71st CPM meeting? Fazeel Soyfoo, Partner International Tax at Andersen, is of the opinion that the Key Rate is set to be maintained at 4.5%. This is due to the political situation and the last budget that was presented. “The government is in a conservation spirit and is trying to give more impetus to the local economy. The growth of the local economy is also based on consumption. An upward revision of the Key Rate will affect consumption,” he maintains.

However, economist Dr Chandan Jankee points out that several countries have been raising their interest rates due to the inflation problem. The MPC, he explains, could opt for a more restrictive monetary policy and opt for a slight increase in the Key Rate. “This will be a way to promote savings and put a brake on consumption. It will also send a strong signal internationally regarding the quest for a stabilisation of our rupee. Indeed, an increase in the key rate will make the Treasury bills of the Bank of Mauritius more attractive to foreign investors. The effect on capital inflows will be reflected in a slight appreciation of the Mauritian rupee,” argues the economist.


On the other hand, a reduction in the Key Rate will be beneficial to consumption. However, Fazeel Soyfoo fears that predictions point towards a depreciation of the local currency, unless the Bank of Mauritius intervenes in the domestic foreign exchange market. According to figures published by Statistics Mauritius, year-on-year inflation stood at 2.2% in June 2024, compared to 7.9% in June 2023. Headline inflation for the 12 months ending June 2024 stands at 4.5%, compared to 10.5% for the corresponding 12 months of 2023. However, Fazeel Soyfoo points out that the imported inflation that Mauritius is experiencing does not depend solely on an adjustment in the Key Rate, but partly on external factors that are beyond our control.

In addition, the US Federal Reserve (FED) maintained its rates between 5.25% and 5.50% last June. The FED is banking on “patience” and is closely monitoring inflation risks.

The progression of the Key Rate

May 2021 to February 2022 1.85%
March 2022 to May 2022 2%
June 2022 to August 2022 2.25%
September 2022 to October 2022 3%
November 2022 4%
December 2022 to date 4.5%

Leave a reply below

Your email address will not be published. Required fields are marked *


Contact Business

Captcha Code