- Decision
- Raise
- Rate change
- 25 bps
- key rate
- 4.75%
The Monetary Policy Committee of the Bank of Mauritius raised the Key Rate by 25 bp to 4.75 % per annum, judging that the sharp rise in energy-driven price pressures and elevated geopolitical uncertainty require firmer action to anchor medium-term inflation expectations while growth is set to slow. After a 50 bp hike to 4.50 % in February 2025 and four consecutive holds through February 2026, this is the first increase in more than a year. The Bank will keep draining excess banking-system liquidity to maintain short-term market rates in line with the policy rate and will continue to monitor foreign-exchange conditions. Headline inflation stayed at 4.2 % between March and April, but year-on-year inflation jumped to 3.6 %, and the Bank now sees headline inflation averaging about 5.5 % in 2026 while real GDP growth is projected to ease to 2.8 % as higher fuel costs and softer tourist arrivals weigh on demand; stress tests confirm banks’ strong capital and liquidity buffers. The IMF has cut its 2026 global growth forecast to 3.1 % and lifted its inflation outlook to 4.4 % following the closure of the Strait of Hormuz, which has tightened global energy supplies and pushed up transport and food costs, leaving global inflation risks skewed to the upside. The MPC pledged to track conflict-related spillovers and stands ready to meet between scheduled sessions to act as needed to fulfil its price-stability and growth mandate.
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.