Seychelles' Central Bank relaxes monetary policy from 2 percent to 1.75

CBS thinks that the reduction in the interest rate of the monetary policy will help to support economic activities in the coming months. (Seychelles News Agency) 

The board of the Central Bank of Seychelles (CBS) has decided to relax the monetary policy rate for the next three months from 2 percent to 1.75 percent, said a top official on Tuesday.

The first deputy governor of the CBS, Brian Commettant, told reporters that this decision was made by the board during discussions on Monday and the other interests that the Central Bank decides, when it changes the monetary policy, will also change.

Commettant said that the decision taken on the monetary policy considered external development and Seychelles' economy.

"Generally, domestic economic activities continue to recover but the level of uncertainty remains high especially related to international development that has a direct impact on Seychelles," he added.   

Commettant said that based on its evaluation, CBS thinks that the reduction in the interest rate of the monetary policy will help to support economic activities in the coming months.  

In his presentation, he also shared the various external economic outlooks, sharing that globally, there is a moderation in monetary policies, with a reduction in the United States and European Union zone's inflation rates expected in the coming months.

Additonally, CBS said in a press statement that the high-interest rate environment, coupled with the decline in international commodity prices and improvements in supply chains, has resulted in a moderation in inflationary pressures in most regions.

"In January 2024, the International Monetary Fund (IMF) revised its global growth projections for the year from 2.9 per cent to 3.1 percent. Despite this improved outlook, the tight monetary conditions that prevail globally are anticipated to dampen economic activity in the short term," said CBS.

On the domestic front, as at March 17, CBS said Seychelles welcomed a total of 81,421 tourists, an increase of 10 percent compared to the same period in 2023.

"This growth primarily stemmed from a rise in visitor arrivals from the traditional Western European markets, particularly Germany, Italy and Russia. Estimated tourism earnings expanded by 22 percent in the first two months of the year compared to the same period last year. Despite the positive performance of the tourism sector, the subdued economic outlook in key tourism source markets as well as the aforementioned global challenges may adversely impact the domestic economy," said CBS.

The CBS said that the escalation of the attacks in the Red Sea, which could impact transit times and shipping costs, remains a global concern.

According to the National Bureau of Statistics (NBS), the annual inflation rate now stands at -0.25 percent, compared to 1.13 percent in February 2023.

Meanwhile, as of March 22, Seychelles gross international reserves stand at $737 million.