Wednesday, November 27, 2019

Mauritius maintains rate but lowers 2019 growth forecast

     Mauritius' central bank left its Key Repo Rate (KRR) unchanged at 3.35 percent but lowered its growth forecast for this year, saying economic developments since August "have been less favorable than expected and downside risks to the growth outlook have increased."
     The Bank of Mauritius (BOM), which cut its rate by 15 basis points in August in a pre-emptive move against the risks of weaker global growth, lowered its growth forecast for 2019 to 3.7 percent from an earlier 3.9 percent but maintained the forecast for 2020 growth of around 4.0 percent.
     Mauritius' gross domestic product grew an annual 3.4 percent in the second quarter of this year, up from 3.3 percent in the first quarter but BOM said the risks to the global economic outlook continue to tilt to the downside.
     Inflation in Mauritius remains low, with headline inflation falling to 0.7 percent in October from 0.0 percent in July, according to BOM.
     Bank staff maintained their forecast for inflation to average 0.5 percent this year and 1.5 percent in 2020.
     Today's decision was decided by a majority as in August when the monetary policy committee also was split in its decision. Today's minutes of the meeting will be released Dec. 11.
     At the August meeting 6 members voted for the cut, one member voted for a 25-basis-point cut and one voted to keep the rate unchanged.
     The Mauritian rupee has been depreciating since February and was trading at 36.6 to the U.S. dollar today, down 6 percent this year.


    The Bank of Mauritius issued the following statement:

"The Monetary Policy Committee (MPC) of the Bank of Mauritius (Bank) has, by majority vote, decided to keep the Key Repo Rate (KRR) unchanged at 3.35 per cent per annum at its meeting today.
The MPC noted that the risks to the global economic outlook continued to tilt to the downside. The IMF has again revised down its global growth projection for 2019 to 3.0 per cent. However, it projects growth to recover modestly to 3.4 per cent in 2020 due to continued macroeconomic support and higher contribution from emerging market economies. The OECD, on the other hand, has forecasted that the global economy would grow by 2.9 per cent in both 2019 and 2020. Inflation is projected to increase from 1.5 per cent in 2019 to 1.8 per cent in 2020 for advanced economies and from 4.7 per cent in 2019 to 4.8 per cent in 2020 for EMDEs.
The domestic economy maintained its growth momentum in 2019Q2, as key sectors continued to grow. However, since the last MPC meeting, economic developments, both on the international and domestic fronts, have been less favourable than expected and downside risks to the growth outlook have increased. Based on latest available information, Bank staff is projecting real GDP growth at 3.7 per cent for 2019 and maintained its forecast for 2020 at about 4 per cent.
Domestic inflation remained low while core inflation measures have remained broadly contained below 2.0 per cent. Headline inflation declined from 0.9 per cent in July 2019 to 0.7 per cent in October 2019. Bank staff has maintained their inflation forecast for 2019 at 0.5 per cent and for 2020 at 1.5 per cent.
Taking into consideration recent external and domestic economic developments and trends, the MPC weighed risks to the growth and inflation outlook and decided to keep the monetary policy stance unchanged.
The MPC stands ready to meet in between its regular meetings, if the need arises.
The Minutes of the meeting will be issued on Wednesday 11 December 2019."


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