MONETARY POLICY COMMITTEE Unchanged Repo Rate and its Implications - PowerPoint PPT Presentation

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MONETARY POLICY COMMITTEE Unchanged Repo Rate and its Implications Do changes in interest rate affect investment and growth? No, since private investment has declined despite low interest rates; and growth of 3.2% only recorded in 2013

MONETARY POLICY COMMITTEE Unchanged Repo Rate and its Implications
 Do changes in interest rate affect investment and growth?  No, since private investment has declined despite low interest rates; and growth of 3.2% only recorded in 2013
 Access to cheap money encourages local investors to borrow from local banks :   increase in credit to some sectors like construction   rise in non-performing loans  Need for a serious study on this issue
 Fixed income earners penalised and impoverished  Savings rate down
Consumers draw in their savings to spend  Saving-to-GDP ratio fell, from 14.4 per cent in 2012 to 12.8 per cent in 2013
Headline inflation Year-on-Year CPI inflation August 2013 3.5 3.1 September 3.5 3.3 October 3.4 3.4 November 3.5 3.9 December 3.5 4.0 January 2014 3.7 5.1 February 3.9 5.6 March 4.0 4.5
Headline Headline Year-on-Year Year-on-Year CORE1 CORE2 CORE1 CORE2 August 2013 2.8 2.7 2.6 2.3 September 2.7 2.7 2.6 2.2 October 2.6 2.6 2.6 2.3 November 2.6 2.5 3.0 2.9 December 2.6 2.6 3.3 3.2 January 2014 2.8 2.6 3.6 3.4 February 2.9 2.7 3.5 3.2 March 2.9 2.7 2.7 3.1
 Mauritius is relying more and more on foreign saving to finance its current account deficit.  An increase in domestic saving can lead to a reduction in the current account deficit and bring about investment-induced economic growth
Beware of liquidity trap!!!  Low interest rates are not stimulating the economy
A rise in the Key Repo Rate will have positive effects on the life of people
Thank You

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