- Decision
- Maintain
- Rate change
- 0 bps
- key rate
- 4.5%
The Monetary Policy Committee of the Bank of Mauritius on 7 May 2025 unanimously left the Key Rate at 4.50 %, judging that a pause best balances slowing domestic activity against the possibility that tariff-driven imported cost pressures lift inflation later this year. After a 50 bp increase in February that took the rate to its current level, the Bank reports that the higher yields have turned 3-month Treasury bill differentials positive and, alongside a firmer MUR against the USD, have eased foreign-exchange market strains while it continues to mop up excess banking-system liquidity. First-quarter data point to softer GDP momentum and, with weaker demand from key trading partners and lower tourist inflows, the Bank has trimmed its 2025 growth forecast to 3.0–3.5 % from 3.5–4.0 %. Headline inflation fell to 2.5 % in March, but is now expected to edge up to around 3.5 % by December—below the earlier 3.7 % projection—amid uncertainty over the impact of global tariff hikes and wage-related services inflation. The Committee noted the recent rupee appreciation and improving FX conditions, yet flagged heightened external risks as the IMF cut its 2025 global growth outlook to 2.8 % and warned of potential tariff-induced price pressures. The MPC pledged continued vigilance and repeated its readiness to convene between scheduled meetings to safeguard price stability and balanced economic development.
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.