- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 12%
The Monetary Policy Committee of Banky Foiben’i Madagasikara (BFM) kept the policy rate at 12.00 % at its 3 February 2026 meeting, judging the current stance appropriate to steer inflation towards the 5 % medium-term target while safeguarding macroeconomic stability amid still-fragile disinflation and excess liquidity. After a 150 bp tightening to 12.00 % in May 2025 the rate has been left unchanged. BFM noted that year-on-year inflation slowed to 7.2 % in December 2025 from the January peak of 9.5 %, and is forecast to continue easing in 2026 on softer global commodity prices and contained money supply growth, which stood at 11.0 % y/y in December within the 8–16 % guideline band; GDP growth is estimated at 3.4 % for 2025, with survey data pointing to a modest first-quarter 2026 and a gradual rebound from the second quarter. The ariary lost 8.8 % against the euro but gained 2.5 % versus the USD in 2025, then strengthened against both currencies in January 2026, while official reserves rose to USD 3.6 bn, covering nearly seven months of imports. Globally, growth held at 3.3 % in 2025 and disinflation progressed unevenly, prompting major central banks to retain a cautious stance. BFM signalled that any policy recalibration will be gradual and data-dependent, warning that premature easing could rekindle price pressures and urging banks to deploy their excess liquidity to support credit to the economy.
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.