Mauritius Central Bank Leaves Benchmark Rate at 4.75% to Help Growth
Mauritius’s central bank left its benchmark interest rate unchanged because of concerns a debt crisis in Europe may harm the country’s economic recovery, even as inflation accelerates.
The repo rate will stay at 4.75 percent, the Port Louis- based Bank of Mauritius said in a statement on its website today. The central bank cut the rate by 1 percentage point in September to boost economic growth and central bank Governor Rundheersing Bheenick said it would remain unchanged for two quarters.
The Indian Ocean island nation’s government and central bank are worried a crisis in Europe may slow its expansion. Europe is the source of two-thirds of Mauritius’s tourism and the destination for 71 percent of its manufactured exports, according to the statistics office.
“The sovereign debt crisis remains a major source of uncertainty for growth in the euro area, a major export market for Mauritius,” the central bank said in the statement.
The economy will expand about 4.2 percent this year, it said, in line with previous forecasts.
Mauritius’s annual measure rose at a rate of 3.9 percent in November, compared with 3.2 percent a month earlier, according to data released by the Central Statistics Office today. Bheenick had warned that inflation will quicken.
The monetary policy committee “discussed alternative interest rate scenarios,” the central bank said. “However, MPC members felt that the balance of risks did not warrant a change in the key repo rate at this meeting.”
The decision was expected due to the need to keep an “equilibrium between inflation and growth,” Raj Makoond, executive director of the Joint Economic Council, which represents Mauritian private industry, said in a phone interview from Port-Louis. “But there may be some risks that inflation goes up next year,” he said.
Mauritius earns most of its foreign currency from tourism, and exports of sugar, clothing and textiles.
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