Select your language

    Mauritius seen holding repo rate steady at 4.65 pct

    Mauritius' central bank is expected to keep its main interest rate at 4.65 percent at next week's policy meeting, a Reuters poll showed on Thursday.

    All eight analysts surveyed said they expected the Monetary Policy Committee (MPC) to keep the benchmark lending rate unchanged when it meets on September 30.

    In June, the monetary policy committee surprised the market when it cut the key interest rate by 25 basis points to 4.65 percent in a move to stimulate growth at a time when inflation is benign. Six out of nine analysts surveyed then had expected the central bank to hold the repo rate.

    The Indian Ocean island's year-on-year rate of inflation, used by policymakers to determine monetary policy, fell to 3.1 percent in August from 3.6 percent, the first time the rate has changed in six months.

    Jacques Nel, an economist at NKC Independent Economists said the lower inflation figures for August would be reassuring for monetary authorities after an unexpected policy rate cut in June raised questions regarding the country's inflation outlook.

    "On the aggregate, we expect that subdued domestic inflationary pressures and uncertainty regarding external developments will result in authorities maintaining the policy rate at 4.65 percent," he said.

    The central bank's rate setting committee, which was reconstituted with new members in March, has been split over whether to raise or lower rates during the last two meetings.

    "Although, I expect the MPC to keep rates on hold, I won't be surprised by another rate cut. It has become very difficult to predict as rationality is not the agenda of the day," told Swadicq Nuthay, economist at Axys Group.

    Earlier this month, Finance Minister Xavier Duval predicted annual average inflation would fall to 3.7 percent this year from 3.9 percent in 2012, helped by the economic slowdown and slower growth in commodity prices.

    However, Governor Rundheersing Bheenick, who voted for a 10 basis point increase of the key repo rate at the last meeting, said in July the MPC should remain cautious with inflation to avoid any surprise.

     

    Off Canvas sidebar is empty

    Login