Modernizing Monetary Policy in Mauritius: Implementation, Analytics, and Communication at the Bank of Mauritius

Selected Issues Papers, August 7, 2026

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Since the adoption of an explicit inflation-targeting regime in 2023, Mauritius has made notable progress in modernizing its monetary policy framework.
Reforms have:
- strengthened the design of monetary policy implementation;
- enhanced analytical capacity through a modern Forecasting and Policy Analysis System (FPAS);
- improved central bank communication.
Remaining constraints include incomplete implementation of the operational framework—particularly persistent excess liquidity that generates deviations between the announced policy rate and the effective stance—which has constrained monetary transmission.
Forward-looking analytical insights need to be enhanced in external communication to better anchor expectations.
Stronger alignment between implementation, analytics, and communication would:
- enhance policy effectiveness;
- further anchor inflation expectations;
- reinforce the credibility of monetary policy in Mauritius.

Progress:
- Design of monetary policy implementation has been strengthened since the 2023 adoption of inflation targeting.
Constraint:
- Persistent excess liquidity remains a feature of the operational framework.
- Excess liquidity generates deviations between the announced policy rate and the effective stance.
- These deviations have constrained the monetary transmission mechanism.

Progress:
- Analytical capacity has been enhanced through a modern FPAS.
Gap:
- Forward-looking analytical insights from the FPAS need to be more visibly incorporated into external communication.

Progress:
- Central bank communication has improved since 2023.
Gap:
- External communication should place greater emphasis on forward-looking analytical insights to better anchor inflation expectations and reinforce credibility.

Align implementation, analytics, and communication to:
- reduce deviations between the announced policy rate and the effective stance;
- strengthen monetary transmission;
- improve the anchoring of inflation expectations;
- reinforce central bank credibility.
Operational focus:
- Address persistent excess liquidity as a priority to ensure the announced policy rate reflects the effective monetary stance.
Analytical and communication focus:
- Enhance the use of FPAS outputs in external communications, with clearer forward-looking guidance drawn from analytical work.