- Decision
- Maintain
- Rate change
- 0 bps
- marginal lending facility rate
- 11.5%
The Monetary Policy Committee of the Central Bank of Madagascar (Banky Foiben’i Madagasikara, BFM) on 4 February 2025 kept the marginal lending facility rate at 11.50 percent and the deposit facility rate at 9.50 percent, judging existing monetary conditions adequate to sustain economic activity while preventing a renewed acceleration of inflation. The corridor thus remains unchanged, with BFM emphasising readiness to act if price dynamics shift. Annual GDP growth is estimated at 4.4 percent for 2024, led by commerce, construction and services, while year-end inflation stayed elevated at 8.6 percent, driven mainly by higher local production costs; money supply growth picked up in the fourth quarter and bank credit expansion was described as moderate. Externally, a wider current-account deficit of 5.0 percent of GDP reflected weaker exports and firmer imports, though FX inflows into development projects supported relative stability of the ariary. Globally, 2024 growth held at 3.2 percent amid regionally divergent performances and generally tight monetary stances that curbed, but did not eliminate, price pressures. The central bank warned that volatile import prices, geopolitical tensions and climate-related supply risks could threaten the 2025 inflation path and said it will continue to monitor conditions and stands ready to adjust policy to safeguard price stability and the currency.
Rate evolution
From August 2025 to May 2026, the Central Bank of Madagascar kept the policy rate unchanged at 12.00%, pausing first to assess the impact of earlier tightening and later the effects of October liquidity measures for banks. The early holds reflected advancing but incomplete disinflation, with inflation easing from 8.2% in June 2025 to 7.5% in September and core inflation slowing, while rice prices, money and credit growth, and then a weaker economy and confidence after political events argued for caution rather than easing. In February and May 2026, although inflation slowed to 7.2% in December and 6.8% in March after a 6.1% January low, the bank said disinflation remained fragile because of supply distortions, excess liquidity and food prices, and, despite weaker activity, kept a restrictive stance as external cost shocks, wage spillovers and geopolitical uncertainty could lift inflation temporarily before easing from 2027, with any future calibration to be gradual.
On 4 August, the bank raised the policy rate to 12.50%, effective 5 August, after annual inflation accelerated to 8.6% in June and core inflation reached 11.4%, while monetary conditions eased and money supply growth rose to 15.1%. The increase aimed to contain projected price acceleration, preserve financial stability and anchor expectations to the 5.0% medium-term inflation objective, as continuing conflicts, global commodity prices, maritime insurance costs and the higher minimum wage threatened to sustain price pressures.