- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 12%
The Monetary Policy Committee of the Central Bank of Madagascar (Banky Foiben’i Madagasikara, BFM) on 5 May 2026 left its policy rate unchanged at 12.00 percent, judging the existing restrictive stance appropriate to steer headline inflation back to the 5 percent medium-term target amid still-elevated external and domestic price pressures. The key rate has remained at 12.00 percent since a 150-basis-point increase in May 2025. BFM provided no new operational changes, noting that monetary conditions remain tight. Annual consumer-price inflation fell to 6.1 percent in January but edged up to 6.8 percent in March on higher food costs; the bank sees upside risks from oil, shipping and fertiliser prices and from wage increases, though it expects a gradual moderation from 2027. GDP growth is forecast at 3.8 percent in 2026 after a broad-based activity slowdown early in the year, while money supply growth picked up to 9.4 percent in March, within the 8–16 percent target band, and bank credit growth decelerated to 10.3 percent. Externally, the ariary appreciated 10.7 percent against the euro and 8.9 percent against the USD in Q1 as a narrower trade deficit and continued development-project inflows lifted foreign reserves to 7.3 months of import cover. The central bank highlighted softer IMF global growth forecasts (3.1 percent for 2026, with downside risks from Middle-East tensions) and a projected rebound in world inflation to 4.4 percent as key external headwinds. BFM reiterated its readiness to maintain a restrictive posture until disinflation is firmly secured and financial stability preserved.
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.