Friday, April 17, 2020

Mauritius cuts rate another 100 bps in 2nd cut this year

      The central bank of the Indian Ocean island of Mauritius cut its benchmark interest rate for the second time in as many months following a review of what it described as "the disruptive effects of COVID-19 on the Mauritian economy and its ensuing implications."
      The Bank of Mauritius (BOM) cut is key repo rate (KRR) by a further 100 basis points to 1.85 percent and has now cut it by 150 basis points this year following a cut on March 10.
      It is the second rate cut since a new governor of BOM took over in late February when the government appointed Harvesh Kumar Seegolam.
      It is also the second unanimous policy decision by the new monetary policy committee.
      Guiding its decision to cut the rate, BOM it had considered the latest economic forecast for Mauritius by the International Monetary Fund as well as projections by the bank.
      In addition to cutting the KRR, BOM also lowered the rate on its Special Relief Amount by 100 basis points, with the interest rate cap on advances to businesses affected by the virus now at a fixed rate of 1.50 percent.
      Following the rate cut in March BOM took a series of initiatives to help businesses on the island, including a 5 billion rupee Special Relief Amount through commercial banks to help firms meet cash flow and workig capital requirements. The program is available from March 23 to July 31.
      On March 13 BOM also lowered its cash reserve ratio by 100 basis points to 8.0 percent, let commercial banks grant a moratorium of 6 months on repayments on existing loans for firms impacted by the virus, eased its credit impairment guidelines, and issued 5 billion rupees of a 2-year savings bond at 2.5 percent to residents of Mauritius.


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