- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 12%
Banky Foiben’i Madagasikara’s Monetary Policy Committee kept the key rate at 12.00 % in its 5 August decision, judging existing monetary conditions sufficiently restrictive to sustain the ongoing disinflation while supporting a nascent rebound in activity. Having raised the rate by 150 bp in May, the committee will now pause to assess the transmission of that tightening. No other operational changes were announced, and the current stance takes effect on 6 August. Headline inflation eased to 8.2 % y/y in June, with projections pointing to a further slowdown toward the 5.0 % medium-term objective, while GDP growth is forecast to reach 4.3 % in 2025 amid robust services output. Money supply and bank credit each rose 13.9 % y/y in June, and sustained project-related foreign-currency inflows kept the ariary broadly stable and lifted reserves to 6.3 months of imports. The global backdrop is softening, with July estimates putting world growth at 3.0 % and major partner central banks largely on hold, though commodity-price volatility and geopolitical tensions remain key risks. The committee pledged to monitor conditions closely and stands ready to adjust policy if needed.
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.