(Updates with central bank comments in fourth paragraph.)
Sept. 12 (Bloomberg) -- Mauritius’s central bank left its benchmark interest rate unchanged for the first time this year as a stronger currency helped curb inflation.
The key rate was kept at 5.5 percent, the Port Louis-based Bank of Mauritius said in a statement on its website today, following a meeting of its Monetary Policy Committee. The bank raised the rate at the past two meetings.
Inflation eased to a six-month low of 6.5 percent in August while a debt crisis in Europe threatens to cut demand for exports, undermining growth in the Indian Ocean island nation. The rupee has gained 9 percent against the dollar this year, the third-best performing currency in Africa, helping to reduce import costs.
“While the headwinds from the euro-area debt crisis and the worsening growth prospects in the country’s main trading partners have increased uncertainty, the MPC does not fully share the mood of pessimism that seems to prevail among certain economic operators,” the central bank said. “Given the high level of uncertainty, members have decided to put on hold the process of normalizing the key repo rate, started in March.”
Twenty-three of 30 analysts surveyed by PluriConseil Ltd., an economic research company, expected the rate to stay unchanged, l’Express newspaper said on Aug. 17.
The central bank reduced its forecast for economic growth this year to 4.4 percent from an estimate of 4.6 percent at the June policy meeting, it said. Inflation will probably slow to 4.3 percent in June next year, the bank said.
“Given the uncertainty worldwide, Mauritius could not afford to further increase the interest rate,” Imrith Ramtohul, senior investment manager at Mauritius Union Assurance, said in e-mailed comments before the decision. “Inflation is currently rising at a much slower pace. A rise could have caused the rupee to appreciate, potentially having a negative impact on exports and economic growth.”
The rupee gained 0.5 percent to 28.1025 by 6:30 p.m. in Port Louis. Europe bought 65 percent of the country’s manufactured goods in the six months through June, according to the statistics office, while the region accounts for about two- thirds of tourists to Mauritius.
--Editors: Gordon Bell, Nasreen Seria
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