harvesh seegolam : current economic conditions and outlook statement by mr harvesh seegolam, governor of the bank of mauritius, at the post monetary policy committee ( mpc ) press briefing, port louis, 15 june 2023. * * * ladies and gentlemen, members of the media, good morning. welcome to this press briefing for the monetary policy committee ( mpc ) meeting, marking the 67th sitting of this committee. at the very outset, i wish to contextualise the holding of this meeting. as i communicated before, in light of the introduction of our new monetary policy framework in january this year, we decided to give ample time for the framework to be well entrenched into the operations of banks and financial markets. in fact, the bank had reviewed its monetary policy framework, which had been in place since 2006, and introduced the new framework effective as from 16 january 2023. the bank worked on the new framework, in consultation with the imf. we have been actively monitoring the operational implementation of our new framework across banks since it was launched and have conducted interactive sessions with the imf for our mpc members. before delving into the latest developments on the economic and financial landscape, i would like to touch upon a measure recently announced by some banks. three banks – namely mcb, sbm and maubank – have decided to offer preferential interest rates on housing loans of up to rs2 million to households with a monthly income not exceeding rs100, 000 and for a period of one year. this industry - driven measure principally aims at supporting the vulnerable and middle - class households. we also take note of the support from government of rs1, 000 per month announced in the budget speech 2023 - 2024 for those households which have taken a housing loan of up to rs5 million. i shall now provide an overview of the latest international and domestic economic and financial developments and outlook before announcing the mpc decision taken today. international economic developments the global economy continues to recover despite a challenging economic environment amidst tightening of financial conditions. the imf, in its april 2023 world economic outlook, has revised down its global growth projection for 2023 by 0. 1 percentage point to 2. 8 per cent compared to its january 2023 forecast. growth in advanced economies is projected at 1. 3 per cent in 2023 while emerging market and developing economies are expected to grow by 3. 9 per cent. leading economic indicators, such

easing of domestic inflationary pressures amidst normalisation of global supply chains and decline in commodity prices. headline inflation stood at 10. 6 per cent in may 2023, down from 11. 3 per cent in february 2023. year - on - year inflation has also declined steadily to 7. 9 per cent in may. core measures of inflation also indicate a sustained softening of underlying price pressures, with a decline in both core1 and core2 inflation. money market the bank had held a number of sessions with key stakeholders on the new monetary policy framework. indeed, financial market participants being the fulcrum of the monetary policy transmission mechanism, it was imperative to have ample interactions, through various committees, with the banking community at large to clarify any concerns they might have about the new monetary policy framework and to set expectations. let me now provide you with some uplifting figures on the money market which reveal that the new monetary policy framework has already started to pay dividends. since 16 january 2023 and up to 31 may 2023, a weekly average amount of rs62. 6 billion of 7 - day bom bills was issued at 4. 50 per cent per annum. banks have availed of the overnight deposit facility for a daily average of rs6. 8 billion since the introduction of the new mpf. these operations by the bank have resulted in a significant decline in rupee excess liquidity in the banking system to a daily average of rs2. 4 billion over the period 16 3 / 6 bis - central bankers'speeches january to 31 may 2023. the bank has also mopped up an amount of rs2. 3 billion through foreign exchange intervention since the beginning of the year. furthermore, the level of outstanding bom instruments issued to manage excess liquidity stood at rs130. 8 billion as at 31 may 2023, with a major proportion of 55 per cent maturing within 7 days. the new operating target, the overnight interbank rate, hovered between 3. 90 per cent and 4. 50 per cent over the period 16 january 2023 and up to 31 may 2023, which is well within the interest rate corridor of the new mp framework. this clearly demonstrates that the new monetary policy framework introduced in january this year is leading to improved effectiveness in the monetary policy transmission mechanism. foreign exchange market the recovery of the domestic fx market remained strong in 2023. total turnover stood at usd5. 1 billion from january to may 2023, constituting an increase