- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 12.5%
The Central Bank of Madagascar held its policy rate at 12.50% for three months from 4 November 2026 to maintain sufficiently restrictive monetary conditions and return inflation towards its medium-term target, following a 50-basis-point increase in August from 12.00%, the level maintained since November 2025. The central bank projects inflation at 9.3% in December 2026, reflecting expected rice and energy price developments, before it begins slowing in the second quarter of 2027 and gradually converges towards the 5.0% target. Inflation risks remain tilted upwards, particularly from geopolitical tensions and uncertain energy and food prices. Economic growth is estimated at 3.5% in 2026, supported by domestic demand, while bank credit continued to expand in the third quarter. Foreign-currency inflows from tourism, transfers and telecommunications contributed to an appreciation of the ariary. Globally, geopolitical tensions, supply-chain disruptions and climate shocks kept oil and rice prices elevated and renewed inflationary pressures despite resilient economic activity. The central bank judged its stance compatible with a gradual return to price stability and economic recovery, and said it would monitor inflation, expectations, banking liquidity, foreign exchange and activity, adjusting policy if necessary.
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.
On 3 November 2026, the bank held the policy rate at 12.50%, effective 4 November 2026 for three months, to maintain sufficiently restrictive monetary conditions to return inflation towards its medium-term objective, as it projected inflation to rise from 8.6% in September to 9.3% in December on expected rice and energy price increases before slowing from the second quarter of 2027.