- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 12%
Banky Foiben’i Madagasikara’s Monetary Policy Committee kept its key rate unchanged at 12.00 % at the 4 November 2025 meeting, deciding to pause and evaluate the impact of the October liquidity-easing measures for banks as disinflation gains traction while domestic activity weakens. Following a 150 bp hike to 12.00 % in May, the rate has been on hold in August and again in November. The operating stance remains unchanged, with the recent relaxation of banks’ deposit conditions at the central bank intended to free liquidity and sustain credit supply. Annual inflation fell to 7.5 % in September from 9.5 % in January, with core inflation at 6.6 %; money supply growth stood at 12.9 % y/y in September and is expected to slow, while GDP contracted in Q3 amid September-October political unrest that is set to weigh on full-year 2025 growth before a gradual rebound in 2026. Externally, the ariary depreciated 5.8 % against the EUR but gained 4.4 % versus the USD between end-December 2024 and 31 October 2025, and foreign-exchange reserves rose to 6.2 months of imports despite a widening trade deficit. The committee noted moderating global growth to 3.2 % in 2025, uneven global disinflation and persistent geopolitical and commodity-price risks. It reaffirmed its commitment to price stability, financial system resilience and economic recovery, and will reassess policy once the effects of recent measures on bank lending become clearer.
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.