Mauritius inflation contained for now

Bloomberg

Inflation expectations in Mauritius are contained for now, leaving room for the central bank to stick to its accommodative stance to support economic growth, Governor Yandraduth Googoolye said as he prepares to chair his first Monetary Policy Committee meeting next month.
The pick-up in the average rate of price growth in the 12 months through December was due to temporary supply constraints and the low base of 2016, Googoolye, who began his term as governor on Jan. 15, said in an emailed response to questions. The core inflation rate, which excludes food and mortgage costs, more than doubled in the period from June to December.
“Although core inflation measures increased, we view that they have been broadly stable and contained,” he said. The central bank will focus on reducing the difference between price growth in Mauritius and its major trading partners “and ensure that our policies are geared towards supporting the competitiveness of the Mauritian economy,” he said.
Mauritius’s $14 billion economy is grappling with higher food prices after heavy rains damaged crops, forcing the country to import. The Bank of Mauritius’s Monetary Policy Committee meets February 28 to decide its next move on interest rates after cutting the benchmark gauge by 1.15 percentage points over the past three years to a record low of 3.5 percent.
The most recent cut of 50 basis points was unanimously decided on Sept. 6 to stimulate more investment in the Mauritian economy, the MPC said at the time.
“The accommodative stance taken by the bank so far has helped to support domestic economic activity,” Googoolye said. “Whether we have reached the end of an accommodative cycle is presumptuous at this stage. We should leave it to the MPC to do this assessment.”
Economic growth in the Indian Ocean island nation is expected to accelerate to 4 percent this year from an estimated 3.9 percent last year, Port Louis-based Statistics Mauritius said in December.
Mauritius is the easiest place in Africa to do business, according to the World Bank, while the African Development Bank ranks it as the most competitive economy in sub-Saharan Africa. The sugar- and textile-exporting nation is targeting becoming a high-income country, which is defined as an economy with a gross national income per capita above $12,735, by 2025.
Googoolye, 63, is the third governor of the Bank of Mauritius since the December 2014 elections. He replaced Rameswurlall Basant Roi, whose three-year contract ended earlier this month and wasn’t renewed. Googoolye first joined the bank in 1985 and was promoted to first deputy governor in 2006 under Basant Roi’s first stint as governor.