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Interest Rate Decisions

The Bank of Mauritius introduced a new framework for the conduct of monetary policy on 18 December 2006. In the new framework, the Key Repo Rate was used as the policy interest rate to signal changes in the monetary policy stance. The Key Repo Rate was set at 8.50 per cent per annum in December 2006. The Bank of Mauritius sets the Key Repo Rate and conducts open market operations to ensure that the overnight interbank money market interest rates move close to the Key Repo Rate.

The Monetary Policy Committee (MPC) was established in April 2007, under section 54 of the Bank of Mauritius Act 2004, with specific responsibility for the formulation of monetary policy. The MPC held its first interest rate-setting meeting on 30 June 2007 and has since determined the level of the Key Repo Rate.

Prior to the use of Key Repo Rate as its policy interest rate, the Bank of Mauritius was using the Lombard Rate to signal its monetary policy stance. The Bank of Mauritius had introduced, as from 15 December 1999, a standing facility known as the Lombard Facility to provide overnight collateralised advances to banks. This facility was operated at the initiative of banks themselves, thereby giving them the necessary means and confidence to engage actively in the treasury management function. The Lombard Rate was the interest rate payable for the use of the Lombard Facility and was used as a signalling mechanism for the Bank of Mauritius 's monetary policy stance. The Lombard Rate was introduced at 14.00 per cent per annum.

Decisions on the policy interest rate are announced and explained, inter alia, in a communication published on the website of the central bank.