- Decision
- Maintain
- Rate change
- 0 bps
- key rate
- 4.5%
The Monetary Policy Committee of the Bank of Mauritius unanimously left the Key Rate at 4.50 per cent, judging a pause prudent as it balances a recently higher 3.1 per cent headline inflation in July (year-on-year 5.2 per cent) against slowing domestic growth and persistent global trade and geopolitical uncertainty. After a 50 bp hike in February, the rate has been on hold at the May and now August meetings. To support transmission, the central bank has sterilised excess liquidity by issuing Rs12 bn of 91-day BoM bills at yields of 4.13–4.29 per cent and absorbing an average Rs52 bn daily through the 3 per cent overnight deposit facility, measures that have bolstered interest-rate differentials and the rupee. Real GDP growth eased to 4.2 per cent y/y in 2025Q1 from 5.2 per cent in 2024Q4, and the Bank now sees full-year 2025 growth near 3.0 per cent amid lingering fiscal and trade-policy headwinds; unemployment rose to 6.0 per cent, while bank credit expanded 11 per cent and the NPL ratio inched up to 3.6 per cent. The current-account deficit widened to 5.1 per cent of GDP in 2025Q1, though reserves remain ample at USD 9.7 bn, equal to 13.2 months of imports. Citing upside inflation risks from tariffs and still-sticky core prices alongside downside risks to activity, the committee maintained a data-dependent stance and reiterated its willingness to act between meetings to safeguard price and financial stability.
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.