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

_Selected Issues Papers, August 7, 2026_

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## Bibliographic details
- Authors: Leandro Medina, Valeriu Nalban
- Published: August 7, 2026
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229055741.018

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### Executive summary and key findings
- 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.

### Implementation: operational framework and monetary transmission
- 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.

### Analytics: Forecasting and Policy Analysis System (FPAS) and modeling
- 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.

### Communication: clarity, forward guidance, and credibility
- 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.

### Policy implications and recommendations
- 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.

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2026/08/05/modernizing-monetary-policy-in-mauritius-implementation-analytics-and-communication-at-the-578589_