finally, i must emphasise that both the management and the board are strong in their resolve to take the bank of mauritius to greater heights in the days to come. if we are to achieve our objectives, we need sufficient autonomy to do so, built on a close working relationship with the government to ensure our polices and actions are complementary in our joint pursuit of economic and social development in this country. 2008 has been a year that will go down as a turning point in the history of global banking and finance. even, as the bank wishes a very happy and prosperous year to all our stakeholders, we must all be conscious of the trials and travails that lie ahead in 2009, a year that could prove still more turbulent as the global crisis may very well intensify further. in 2009, the bank needs to continue to be alert to the global financial and banking volatility and must be especially vigilant in protecting our interests and judiciously managing our reserves. no country has been immune to the crisis, but as light craft can in safe hands weather a storm, so this small, vulnerable and highly open economy of mauritius may be buffeted but will maintain course and shall not be sunk. the bank of mauritius will do all that is possible to ensure a safe passage through these difficult times in matters of banking and financial policy and practice. best wishes for 2009.

now low, and household consumption has fallen recently. economic activity has been slightly weaker than we anticipated at the time of the september monetary policy meeting. at the same time, there are wide differences across industries. while companies supplying goods and services to the petroleum industry are experiencing strong growth, activity in the construction industry is declining. housing construction is low. in the secondary housing market, there is a large stock of unsold homes, and house prices have declined. the labour market is still tight. unemployment has remained low, as expected. but new job advertisements have decreased, and the number of employed appears to be lower than we anticipated in september. chart : inflation has fallen consumer price inflation has moved down recently, falling more in september than projected. energy prices have decreased sharply, and the rise in prices for other goods and services has also decreased more than expected. despite the price declines, inflation is still high. excluding energy prices, inflation is close to 6 percent. energy prices are very volatile, and futures prices indicate a renewed increase. when setting the policy rate, the committee must weigh various considerations. if we tighten too little, prices could continue to rise at a fast pace, partly because the krone exchange rate could weaken. the longer inflation remains elevated, the more costly subsequent disinflation may prove to be. but if we tighten too much, the economy will contract more than necessary, which is something we want to avoid. monetary policy is now having a tightening effect on the economy, and we have not yet seen the full effects of the past rate hikes. the committee assesses that the policy rate is now likely close to the level needed to tackle inflation. this means that we can take a little more time to assess whether there is a need to raise the policy rate further. chart : policy rate will likely be raised in december the information that has come in since the previous monetary policy meeting pulls in different directions with respect to the interest rate outlook. on the one hand, inflation has fallen more than expected, and economic activity has been slightly weaker than projected. on other hand, the krone has been weaker than anticipated. the krone depreciation may contribute to sustaining inflation ahead. whether additional tightening will be necessary depends on how the economy evolves. based on our current assessment of the outlook, the policy rate will likely be raised in december. the committee will have received more information about the inflation outlook ahead of its monetary policy meeting in december. if we become more assured