As the outlook for Mauritius growth deteriorates, the Indian Ocean island has decided to cut its benchmark interest rate.
The change in the estimations for growth has lead the Bank of Mauritius to lower its benchmark rate for the first time in more than two years, falling from 4.65% to 4.40%. The previous benchmark had remained unchanged since June 2013, after being lowered from 4.9%.
The July projections expected a 3.7% growth for Mauritius, whilst a more recent growth forecast by the Central Bank predicted a slightly lower rate at 3.4%. The negative output gap is projected to be maintained throughout the next year.
The inflation outlook for 2016 is projected to be relatively moderate, rising from 2.6% at the end of 2015 to 3.3% in 2016.
However, central bank Governor Ramesh Basant Roi stated that the economy looks to expand by more than 4% thoughout 2016, suggesting that the local economy is currently below capacity and this expansion should act as a stimulus to boost further development.