Monday, March 19, 2012

Bank of Mauritius Cuts Benchmark Rate 50bps to 4.90%

The Bank of Mauritius cut its benchmark interest rate by 50 basis points to 4.90% from 5.40%.  The bank said: "The MPC weighed the risks to the growth and inflation outlook over the policy-relevant horizon and concurred that a cut in the Key Repo Rate was warranted in view of  the  higher  downside risks to the domestic growth outlook compared with the upside risks to the inflation outlook.  The voting pattern was, however, split with regard to the magnitude of the decrease."

Previously the Bank of Mauritius cut the rate by 10 basis points at its December meeting, and last raised its repo rate by 25 basis points to 5.50% at its June meeting, after raising 50 basis points in March this year to 5.25%.  Mauritius reported inflation of 6.2% in February this year, 6.5% in August, 7.2% in March, and 6.8% in February last year, meanwhile the bank expects inflation to decline to around 5.3% by June 2012 and 4.7% by December 2012.

The Bank revised its forecasts downward slightly and now expects the economy to grow about 3.8% this year (down from 4.1% and 4.6% previous forecasts), having recorded annual GDP growth of 4.4% in 2010.  The Mauritian Rupee (MUR) has weakened about 2% against the US dollar over the past year, with the USDMUR exchange rate trading around 29.1

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