In September 2010 the Bank of Mauritius, the central bank, cut the repurchase (repo) rate from 5.75% to 4.75%-the first interest-rate change since March 2009. The bank had hesitated over taking such decisive action because of fears about the impact on inflation. However, in September it believed-wrongly, as it turned out-that inflation would remain below trend for some time and decided to loosen monetary policy to try to stimulate economic growth. Although at its meeting in December the bank's monetary policy committee forecast 7% annual inflation in June 2011, it decided to keep the repo rate at 4.75% owing to the uncertain global economic prospects and the consequent risks for Mauritius. We expect interest rates to remain stable in 2011, before following the global trend and rising in 2012.