- Decision
- Raise
- Rate change
- 25 bps
- key rate
- 5%
The Bank of Mauritius’s Monetary Policy Committee (MPC) unanimously raised the Key Rate by 25 basis points to 5.00% per annum, citing the risk of inflation becoming entrenched above target despite downside risks to growth. The move followed a 25-basis-point increase to 4.75% in May 2026 and a hold in August. Headline inflation, measured using a 12-month moving average, reached 4.3% in October and is projected to exceed the central bank’s 2–5% target range in 2027. Inflation expectations remain anchored but hover at the target ceiling, while drought could add to food-price pressures. The central bank projects real gross domestic product growth of 3.0% in 2026, with financial services and tourism supporting activity while construction and manufacturing remain lacklustre. Globally, higher energy and food prices and persistent services inflation are broadening price pressures, while geopolitical tensions, maritime-route risks and trade-policy uncertainty threaten growth. The MPC acknowledged that higher rates would strain borrowers but judged timely action necessary to protect purchasing power and future growth. It will remain data-dependent and stands ready to act between regular meetings if necessary.
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 (MPC) 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 while assessing the transmission of the May increase and recent budget initiatives, balancing persistent underlying inflation and upside price risks against downside growth risks, with the Bank forecasting headline inflation of around 5 per cent and growth of 2.8 per cent for 2026.
On 11 November 2026, the MPC unanimously raised the Key Rate by 25 basis points to 5.00 per cent as inflation broadened and core inflation remained elevated, judging that action was needed to prevent inflation becoming entrenched above the 2–5 per cent target range and expectations becoming unanchored, with the Bank projecting headline inflation at 4.7 per cent in December 2026 and 5.5 per cent in December 2027.