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Towards Full-Fledged Inflation Targeting Monetary Policy Regime in Mauritius

Ashwin Madhou, Tayushma Sewak, Imad Moosa, Vikash Ramiah and Florian Gerth
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Ashwin Madhou: Research and Economic Analysis Department, Central Bank of Mauritius, Sir William Newton Street, Port-Louis 11328, Mauritius
Tayushma Sewak: School of Economics, The University of Adelaide, Adelaide, SA 5005, Australia
Imad Moosa: School of Economics, Finance and Marketing, RMIT University, RMIT University, Melbourne, VIC 3000, Australia
Vikash Ramiah: Faculty of Business, University of Wollongong in Dubai, Dubai P.O. Box 20183, United Arab Emirates
Florian Gerth: Faculty of Business, University of Wollongong in Dubai, Dubai P.O. Box 20183, United Arab Emirates

JRFM, 2021, vol. 14, issue 3, 1-18

Abstract: An increasing number of emerging and developing countries have adopted or are transitioning towards full-fledged inflation targeting (FFIT) as the main monetary policy framework to anchor inflation. In this paper, we explore the FFIT regime as a means for Mauritius to achieve stable inflation, anchor inflationary expectations and establish credibility in committing monetary policy towards price stability as its primary goal. This paper reviews and highlights issues experienced with the current monetary policy framework and the challenges in transitioning towards FFIT. Given that forecasting is central to FFIT, we develop a practical model-based forecasting and policy analysis system (FPAS) to support transition to FFIT, taking into account structural features and shocks that are specific to the Mauritius economy.

Keywords: inflation targeting; monetary transmission mechanism; forecasting; Mauritius (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
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