The central bank's primary job is to maintain price stability, although legislation also tasks it with maintaining an adequate level of international reserves and promoting non-inflationary economic growth. The MMA achieves monetary stability partly through the peg between the rufiyaa and the US dollar. In view of the peg, the central bank has little scope to conduct an independent monetary policy. However, the MMA also uses minimum reserve requirements for banks and open-market operations as instruments to control credit creation and money supply. As economic growth will ease in 2019-20, we believe that the central bank will seek to maintain a fairly accommodative policy stance to provide support to the economy. Its actions should prevent market lending and deposit rates from increasing in 2019.

In addition to its limited scope to conduct monetary policy, the MMA tends to be influenced by political considerations, as was highlighted by the premature departure of its most recent governor, Ahmed Naseer in July 2019. Mr Naseer resigned from the midway through his seven-year term, after he was accused of interfering unduly in the working of the Financial Intelligence Unit (FIU). The FIU is an independent agency within the MMA that functions as the country's anti-money-laundering watchdog. Mr Naseer denies the allegation. The new governor, Ali Hashim is a political appointee who served as finance minister (2008-10) in the previous MDP-led government during Mr Nasheed's presidency. However, we do not expect a major shift in the central bank's monetary policy stance under Mr Hashim's leadership.