(Bloomberg) -- Mauritius’ central bank cut its benchmark interest rate at an unscheduled meeting for the first time since rolling out a new monetary policy framework as inflation inched closer to the midpoint of the targeted range.
At a meeting held earlier on Friday, the monetary policy committee voted to reduce the rate by 50 basis points to 4%, Governor Harvesh Seegolam told reporters in Port Louis, the capital.
The reduction is the first since the Bank of Mauritius introduced a new framework in January 2023 and set an inflation target band of 2% to 5%. When including its previous policy rate it would be the first cut in almost four and a half years, since a percentage point drop in the wake of the coronavirus pandemic. Annual inflation was at 2.7% in August from a peak of 12.2% at the end of 2022.
“Interest rate cuts from major central banks are well underway” as the global inflation retains a downward trend, he said.
The decision mirrors the Federal Reserve’s announcement on Wednesday. The South African Reserve Bank and European Central Bank have also lowered by 25 basis points each.
“The MPC deliberated that, while growth remains consistent, the ongoing disinflationary process is well entrenched in 2024 and looks set to achieve the medium-term target of 3.5%, with upside risks to the inflation outlook subsiding,” he said. “This environment creates space for a lower policy rate, without compromising on other macroeconomic objectives.”
The bank maintained its 6.5% gross domestic product growth projection for the year.
The Mauritian rupee gained 0.3% to 45.78 rupees to the dollar at 2:40 p.m. in the capital, Port Louis, the strongest in six months.
--With assistance from Simbarashe Gumbo.
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