Mauritius’s central bank has limited leeway to cut its benchmark interest rate, said Ridle Markus, a strategist at Absa Capital.
“We do not believe that there will be significant further reductions in the policy rate, though there may be scope for a smaller reduction of perhaps 50 basis points at its June 11 meeting to 4.4 percent,” Markus said in an interview on May 21 in Ebene, south of Port Louis, the capital.
The Indian Ocean island nation cut its economic growth forecast for this year to 3.6 percent from 4 percent in March because of declining demand in Europe, its main trade partner. The central bank has reduced its benchmark rate by 0.6 percentage point since December to 4.9 percent.
“The uncertainties and risks related to the euro zone suggest that growth concern may rise relative to inflation,” Markus said.
Inflation in April was little changed at 3.84 percent, the lowest for 18 months. It may accelerate to about 4.6 percent by year-end, Markus said. The rupee has weakened 0.7 percent against the dollar this year.
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