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.
Bank of Mauritius2026-05-20
Bank of Mauritius raises Key Rate by 25 basis points to 4.75 % per annum
Bank of Mauritius raised its Key Rate 25 bp to 4.75 %, the first hike since February 2025, citing energy-led price pressures and geopolitical risks and vowing to continue draining excess liquidity and watch foreign-exchange markets to anchor inflation expectations. It now sees 2026 headline inflation at about 5.5 % and real GDP growth easing to 2.8 %, says banks remain well capitalised and is prepared to meet between scheduled sessions if conflict spillovers worsen.