PM Now Understands Importance of Monetary Policy

That was not the case back in 2005 when he did not immediately appoint Bheenick as Governor of the Central Bank. And I don't think he understood how important monetary policy is for the country and for the career of politicians when he nominated Manou back in 2007 on Valentine's Day. Granted he considered a few options but in the final analysis Bheenick was minted Governor mostly because he didn't want to give in to Sithanen. That's quite understandable given that both Vishnu Lutchmeenaraidoo and Manou Bheenick were denied a ticket which considerably reduced a mesmerised Ramgoolam's options as far as the crafting of economic policies go.

He appears to have learned his lesson because during the last electoral campaign he announced that Bheenick would be returning at the Bank of Mauritius. That's, by the way, the closest you can get to having an elected Governor.

Coordination Allowed BOM To Increase Repo By Only 0.5%

With the Treasury that is. See pump prices go down by a couple of rupees tonight and this enabled the MPC to raise its policy rate by only half a percent to 5.25% to help set monetary conditions to a level which is not consistent with double-digit inflation by the end of 2011.

So it looks as if Pravind Jugnauth has understood that his last budget was inflationary. And he is not the only one to have made an about-face on the price-stability issue. Indeed, gran frer gran malelve appears to have also recently discovered the joys of low inflation.

Repo Rate Raised By 50 BPS To Prevent Second-round Effects

As widely expected, well, save the JEC. BOM's primary objective being price stability it had little choice to raise the repo rate to 5.25% as inflation had been on the rise after Pravind Jugnauth's budget. Besides monetary policy operates with a lag and inflation is like...radioactivity.