Inflation worries BOM

The Bank of Mauritius (BoM) issued its Monetary Policy Statement on Tuesday which explained the recent rise of the key repo rate by 50 basis points to 5.25 per cent per annum on March 28. The document mentioned that emerging and robust economies had maintained expansion, reflecting sustained domestic and rising global demand for commodities as well as resurgent capital flows.

The BoM also stated that global economic growth continued in 2011. It has slightly reviewed its forecast of global growth in 2011 to 4.4 per cent.

Growth prospects have been revised for economies such as the US, which jumped by 0.7 per cent while countries such as Germany, France and Spain rose by 0.7, 0.3 and 0.2 per cent, respectively. Economic growth in Britain fell by 0.5 per cent in the last quarter.

The MPC also noted that global inflation increased across regions which rely mainly on food and energy prices. Oil prices, on account of the political upheaval in North Africa and the Middle East – a major oil producing region – fuelled inflation. The report also mentions the situation in Japan, the third largest oil producer in the world.

On the domestic level, the BoM estimated economic growth at 4.4 per cent in 2010. It has also forecast a growth rate of 4.6 per cent in 2011. The BoM also forecast year-on-year inflation to reach 7.8 per cent by June and 7 per cent in December while headline inflation could exceed 5 per cent in June and 8 per cent in
December.