- Decision
- Raise
- Rate change
- 50 bps
- key rate
- 4.5%
The Monetary Policy Committee of the Bank of Mauritius unanimously raised the Key Rate by 50 bp to 4.50 % per annum, citing upside risks to inflation from persistent domestic services costs, a still-positive output gap and the threat of higher imported prices should a prospective global trade war lift commodity costs and weaken the rupee. Excess liquidity and the resulting negative interest‐rate differential with major currencies have weighed on the currency and impaired policy transmission; the central bank said it will continue open-market operations and expects banks to lift savings deposit rates to strengthen pass-through. Annual GDP growth is projected at 3.5–4.0 % in 2025 after broad-based momentum in construction, financial services, tourism and trade, while headline inflation stood at 3.6 % in December 2024 and is forecast to finish 2025 at 3.7 %, above the 3.5 % medium-term midpoint. The committee noted that tariff actions under consideration by the United States against several trading partners could reverse the recent global disinflation trend and delay rate cuts worldwide. It pledged to monitor conditions closely and stands ready to take further action to keep inflation expectations anchored and contain exchange-rate pressures.
Rate evolution
From August 2025 to May 2026, the Bank of Mauritius held the Key Rate at 4.50 per cent through three meetings before lifting it by 25 basis points to 4.75 per cent. The August hold was presented as a finely balanced decision, with the Monetary Policy Committee weighing delicate domestic growth and downside risks from trade uncertainty and fiscal consolidation against rising but partly transient inflation, while also flagging sticky core and services inflation, tariff-related price pass-through risks, and improved foreign exchange conditions after earlier tightening and liquidity operations. In November 2025 and February 2026, the MPC maintained a prudent wait-and-see stance as activity proved resilient, tourism improved and inflation was forecast to ease or settle close to the mid-point of the target range, though medium-term inflation expectations still needed anchoring and downside growth risks and upside inflation risks from geopolitics and climate-related shocks persisted. In May 2026, the MPC shifted to tightening as the Middle East escalation and closure of the Strait of Hormuz lifted energy, food, freight and imported costs, pushed projected 2026 headline inflation to around 5.5 per cent, and raised concern about second-round effects.
On 12 August 2026, the MPC unanimously held the Key Rate at 4.75 per cent, taking a cautious approach as it balanced persistent underlying inflation and upside risks from geopolitical tensions, supply disruptions and external price shocks against downside risks to growth. The Bank lowered its 2026 headline inflation forecast to around 5 per cent and maintained its growth forecast at 2.8 per cent, while the MPC continued to assess the transmission of the May rate increase and recent budget initiatives and signalled readiness to act if necessary.