Mauritian Central Bank Governor Rundheersing Bheenick said his concern over inflation is a minority view among monetary policy makers including Finance Ministry representatives who want lower rates to boost growth.
The eight-member Monetary Policy Committee, led by Bheenick, voted in a majority decision yesterday to cut the bank’s benchmark interest rate to 4.65 percent from 4.9 percent. The MPC also cut its growth forecast for this year to a range of 3.2 percent to 3.7 percent. The economy grew an estimated 3.3 percent last year.
For the second time this year, Bheenick said he was among the minority who voted for an increase in the rate, proposing a rise of 25-basis points to help contain inflation. Two “distinct schools of thought” emerged: one citing inflation risks, the other promoting economic growth, he said.
“It seems that the focus of the Ministry of Finance is more on growth rather than inflation,” Bheenick told reporters today in the capital, Port Louis, according to an audio recording on the bank’s website. A “targeting approach to growth is just a pipe dream.”
Inflation is forecast to accelerate to between 5.3 percent to 5.8 percent by year-end, compared with 3.7 percent last month, as wage demands rise, the bank said yesterday.
The MPC is next scheduled to meet on Sept. 30, according to a slide-show presentation published on the bank’s website today. Policy makers will remain vigilant on the economy and convene earlier if necessary, the bank said yesterday.
The committee also comprises two deputy central bank governors, two members appointed by the prime minister, including Harvard University Professor Jeffrey Frankel, and three chosen by the Finance Ministry, among them Professor Silvana Tenreyro of the London School of Economics, according to the bank’s website.
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