PORT LOUIS: The Bank of Mauritius is expected to trim its benchmark lending rate on Monday on the back of a worsening growth outlook for the Indian Ocean island and a marked slowdown in year-on-year inflation.
Seven out of nine economists surveyed by Reuters predicted a cut in the central bank's key repo rate, with most going for a 25 basis point reduction to 5.15 percent, following on from a 10 basis point cut in December.
The year-on-year rate of inflation dropped to 4.1 percent in February, the lowest since November 2010, and the International Monetary Fund (IMF) downgraded its growth forecast for Mauritius in January.
The IMF cut its 2012 growth forecast to 3.7 percent from 4.1 percent. Finance minister Xavier Duval said in January the government was also considering lowering its forecast to below the current 4 percent.
In December, the MPC said it believed monetary policy was broadly appropriate, but trimmed the repo rate to 5.40 percent from 5.50 percent due to worsening business and consumer confidence in Mauritius.
The analysts predicting no change in rates, said they expected that because five members from outside the bank were only anointed to the MPC this month, it was likely to be very cautious at its first meeting.
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