The central bank of the island of Mauritius left its benchmark repurchase rate steady at 3.50 percent, saying its monetary policy committee had unanimously concluded that its current policy stance was supporting growth in an environment where inflationary pressures were contained and the forecast for this year and next year was lowered.
The Bank of Mauritius (BOM), which has maintained its rate since cutting it in September 2017, confirmed its forecast for the economy to expand by 4.0 percent in 2018 and 2019, up from 2017's 3.5 percent, amid a global economic environment where risks have shifted to the downside.
"The outlook on the domestic economy remains quite upbeat," BOM said, adding there is still some spare capacity in the economy.
Economic activity is sustained due to the contribution of the services and construction sectors while pro-growth budget measures, household consumption and capital spending on infrastructure projects are supporting growth, BOM said, and business and consumer confidence is rising.
Mauritius' Gross Domestic Product grew by an annual rate of 4.0 percent in the first quarter of this year, up from 3.8 percent in the previous quarter.
Inflation has declined in recent months after an adverse shock to food prices subsided and there was a downward adjustment to prices of administered goods, BOM said.
BOM said headline inflation fell to 4.0 percent in July from 5 percent in March and April and lowered its forecast for inflation to average 3.5 percent this year, down from May's estimate of 4.2 percent.
For 2019 inflation is forecast at 3.0 percent, down from an earlier estimate of 3.8 percent.
CPI inflation fell to 1.7 percent in July from 7.0 percent in February.
After slipping in the first five months of the year, the Mauritian rupee has stabilised in the last couple of months and was trading at 34.8 to the U.S. dollar today, down 2.6 percent this year.
