Friday, November 9, 2018

Mauritius maintains rate, 2019 inflation, growth forecast

      The central bank of Mauritius, the Indian Ocean island, left its benchmark repurchase rate steady at 3.50 percent as it lowered its 2018 estimate of inflation further while maintaining the outlook for inflation next year.
      The Bank of Mauritius (BOM), which has kept its rate steady since cutting it in September 2017, projected that 2018 inflation would average 3.2 percent, down from the August forecast of 3.5 percent and May's forecast of 4.2 percent. Inflation in 2017 averaged 3.7 percent.
      After rising to 7.0 percent in February, inflation in Mauritius decelerated sharply to 1.0 percent by June as shocks to food prices subsided and some administered prices fell. Since then inflation has picked up speed and rose to 2.8 percent in October from 1.9 percent in September.
     Barring major shocks to supply, BOM forecast 2019 inflation of 3.0 percent, as in August.
     The economy of Mauritius has slowed in recent quarters but BOM left unchanged its forecast for growth to average 4.0 percent this year and next year, up from 3.5 percent in 2017, supported by rising consumption and public infrastructure investment.
     Year-on-year Mauritius' gross domestic product grew 3.7 percent in the second quarter, down from 4.1 percent in the first quarter.
      "The MPX weighted the risks to growth and inflation outlook and concurred that monetary conditions are currently appropriate and supportive of economic growth and price stability," BOM said.
      The Mauritian rupee has been relatively stable since June after depreciating in the first half of the year. Today the rupee was trading at 34.6 to the U.S. dollar, down 2 percent this year.

      The Bank of Mauritius issued the following statement:

"The Monetary Policy Committee (MPC) of the Bank of Mauritius (Bank) has unanimously decided to leave the Key Repo Rate (KRR) unchanged at 3.50 per cent per annum at its meeting today.
The MPC noted that, since its August 2018 meeting, there has been a downgrading of global growth forecasts. In its October 2018 World Economic Outlook, the IMF has revised down its growth projections for both 2018 and 2019 by 0.2 percentage point to 3.7 per cent, reflecting mainly global economic uncertainties. The forecast of global inflation has been revised up to 3.8 per cent in 2018 and 2019. 
Domestically, headline inflation is projected at around 3.2 per cent in 2018 compared to 3.7 per cent in 2017. The Bank forecasts an inflation rate of 3.0 per cent for 2019, barring major supply shocks. 
The Bank maintains real GDP growth at 4.0 per cent for 2018 on account of stronger economic activity in key sectors of the economy. Higher consumption expenditure and public infrastructure investment are supporting the growth momentum. For 2019, real GDP is expected to grow by 4.0 per cent. The unemployment rate is estimated to decline to 6.9 per cent in 2018.  
The MPC discussed extensively the level of excess liquidity and noted that short-term interest rates continue to be around the KRR following the implementation of appropriate measures. 
The MPC weighed the risks to growth and inflation outlook and concurred that monetary conditions are currently appropriate and supportive of economic growth and price stability. 
The MPC will issue the Minutes of its meeting on Friday 23 November 2018."


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