Mauritius Central Bank Raises Interest Rate to 5.5% to Counter Inflation
Mauritius’s central bank raised its benchmark interest rate by a quarter of a percentage point to rein in inflation that is near its highest level in more than two years.
The repo rate was increased to 5.5 percent, the Port Louis- based Bank of Mauritius said in a statement on its website today, following a quarterly Monetary Policy Committee meeting. It’s the second consecutive increase.
“MPC members felt that, with the output gap nearing zero and underlying inflationary pressure not showing signs of abating, the process of normalizing the key repo rate should be continued,” it said. “The MPC considered it important to prevent the high consumer price inflation from generating second-round effects.”
Inflation in the Indian Ocean nation, a net importer of food and fuels, accelerated for six consecutive months to 7.2 percent in March from 2.5 percent in September as imports bills soared, driven by global price increases. It stood at 7.1 percent in May, the Central Statistics Office said on June 7.
“The central bank wants to preserve the purchasing power of the citizens,” Imrith Ramtohul, a chartered financial analyst at Port Louis-based Mauritius Union Group, said by phone before the rate decision. “The committee wants to encourage savings with positive real interest rates.”
Europe Trade
The central bank kept its forecast for economic growth this year at 4.6 percent, even though there are “uncertainties clouding the economic prospects of some of the country’s trading partner,” the Bank of Mauritius said.
Europe is the country’s main market, buying 65 percent of Mauritian exports for the quarter through March, the data agency said on May 31. Mauritius earns most of its foreign currency from tourism, and exports of sugar, clothing and textiles. About two thirds of tourists to the island are from Europe, the statistics office said on May 19. It imports all its fuel requirements.
Mauritius’s rupee weakened 1.1 percent to 28.58 against the dollar by 6:40 p.m. in Port Louis, paring gains this year to 8 percent.
To contact the reporter on this story: Kamlesh Bhuckory in Port Louis at kbhuckory@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net
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