Monetary Policy-Making in Mauritius

The implementation of monetary policy in Mauritius has changed dramatically over the past two decades. This paper starts by describing the original mechanism of implementing monetary policy from the establishment of the Bank of Mauritius in 1968 until the reforms of the 1990s. The description is followed by a short analysis of the defects of the earlier system and the rationale for adopting alternative mechanisms for implementing monetary policy. The paper then describes the present system by which monetary policy in Mauritius is implemented. Although monetary policy can never be explained in isolation from fiscal and exchange rate policy, this description touches on fiscal and exchange rate policies only where absolutely necessary.