CBS holds first monetary policy meeting for the year |07 April 2015

International developments which impact upon or are relevant to the Seychelles economy were discussed during the Central Bank of Seychelles’ (CBS) first monetary policy meeting for this year.

Particular focus was on the global outlook for the year and developments in the Eurozone economies.

Subsequently, the economic data releases and monetary policy decisions of the Eurozone and other key world economies, such as the US were also reviewed, largely due to the impact on trade.  

International commodity markets continued to observe a declining trend, notably in food and oil prices due to promising production prospects and weaker demand, respectively.

In addition to being acquainted with the latest domestic developments and recently published economic data, the board considered the potential outcome of the quarter and prospects for the rest of the year.  

The key economic sectors and their performance were evaluated with latest available tourism data, as at March 15, 2015, showing an increase of 8.4 per cent in visitor arrivals compared to the same period of 2014.  

With regard to the domestic currency, an appreciation has been observed year-to-date against the three major trading currencies – a strengthening largely driven by external factors alongside reduced domestic demand as a result of tighter monetary policy.  

With the introduction of a newly-rebased Consumer Price Index (CPI) in January 2015, the inflation outcome stood at 3.7 per cent year-on-year as at February 2015.  This result reverses the downward trend observed in inflation during the previous year, although seasonal factors cannot be ignored.

Following the analysis of all available data and information, the board deliberated on prospects for the coming months and the rest of the year which might impact upon the bank’s primary objective of price stability.  

Consequently, the board unanimously approved to maintain the current monetary policy stance for the second quarter of 2015 and to revert to quantity-based deposit auction arrangements (DAA) as of April 1, 2015.  

The decision reflects the potential inflationary pressures anticipated in the short-term and the need to mitigate their effects.  

“The CBS remains vigilant and continues to actively monitor developments locally and internationally, standing ready to adjust policies should the need arise,” a spokesperson for the bank said.

Meanwhile the CBS released the Annual Report for 2014 on March 31, 2015, in accordance with the Central Bank Act, as amended.  

The Annual Report provides a review of the various sectors of the domestic economy in addition to the operations and financial statements of the bank.  
A soft copy of the report can be obtained on the Central Bank website.