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Mauritius May Raise Benchmark Interest Rate as Early as March

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Dec. 7 (Bloomberg) -- Mauritius may raise interest rates as early as March as inflation accelerates more than previously forecast, central bank Governor Rundheersing Bheenick said.

It would be “too bold to say that the repo rate will be maintained at the next meeting” on March 28, Bheenick told reporters today in Port Louis, the capital. “If inflation goes up, the central bank will have to take appropriate measures.”

The bank left its benchmark rate at 4.75 percent yesterday on concern the European debt crisis may damp demand for exports and slow tourist arrivals. The threat of weaker growth offset concern that inflation will accelerate to 5.7 percent by year-end and exceed 7 percent by June, Bheenick said today.

The bank had forecast in June that inflation would average 5 percent over the next 18 months. The inflation rate rose to 3.9 percent in November from 3.2 percent the month before.

The margin for further rate cuts is “almost nil,” Bheenick said.

The repo rate was reduced by 1 percentage point on Sept. 27, with a view to boosting economic growth. Bheenick said at that time that the rate would remain unchanged for two quarters.

The central bank governor repeated calls for commercial banks to lend more to industry. With excess liquidity in the system, the central bank will consider methods of “coercion” to get banks to lend the money on to clients, he said, without giving details.

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