Mauritius Central Bank Sees Rates on Hold Until Economy Revives
Mauritius’s central bank will keep its benchmark interest rate at a record low of 1.85% until the economy shows signs of a sustained recovery.
“The accommodative stance will prevail as long as the economy requires it,” Bank of Mauritius Governor Harvesh Seegolam said in e-mailed responses to questions. “Any normalization will take place when we have concrete data to show that economic activities have picked up in a significant and sustainable manner, and have gained momentum for the medium-term.”
The central bank expects the tourism-dependent Indian Ocean island nation’s economy to expand 5.5% in 2021. That’s down from a February estimate of 7.9%, after a second wave of coronavirus infections forced the country to impose new lockdown restrictions.
Mauritius’s economy shrank 14.9% last year, the biggest contraction in four decades.
“When do we start normalizing? It can be as soon as next quarter or next year,” Seegolam said.
While Mauritius’s inflation rate rose to a more than three-year high of 6.5% last month, price-growth is still “tolerable,” Seegolam said.
“Price increases are not driven by demand, rather primarily by international factors and developments,” he said.
The Bank of Mauritius’s monetary policy committee is scheduled to hold its next meeting on Oct. 6.
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