The central bank of the Indian Ocean island of Mauritius left its key interest rate steady, saying the economy started showing better resilience in the third quarter of last year and the bank’s staff had revised upward its forecast for growth this year to 7.9 percent from September’s forecast of 7.5 percent.
The Bank of Mauritius (BOM) kept its repo rate at 1.85 percent, unchanged since April last year when it was cut for the second time in 2020 in response to the hit to economic activity from COVID-19 after an initial cut in March.
Last year BOM cut its benchmark rate by a total of 150 basis points and at its last meeting in September, the monetary policy committee lowered its forecast for gross domestic product in 2020 to contract by 13 percent due to weaker demand for its exports.
In the third quarter of 2020 Mauritius’ economy shrank 12.5 percent year-on-year, up from a 32.5 percent plunge in the second quarter and a 2.0 percent contraction in the first quarter.
In September the bank raised its forecast for economic growth in 2021 to 7.5 percent from an earlier forecast of 7.0 percent, and forecast inflation of around 2.5 percent in both 2020 and 2021.
Inflation in Mauritius eased to 2.7 percent in December from 3.1 percent in November and BOM said inflation will continue to be subject to supply-side pressures.
But in the absence of further external shocks, it forecast headline inflation of around 3.0 percent in 2021.
The policy committee generally meets once a quarter but the November policy meeting was cancelled, so Friday’s February 5 meeting is the first since September 23, 2020.
