Bank of Mauritius Raises Key Rate to 4.75%

The Central Bank of Mauritius raised its key repo rate by 25 basis points to 4.75% during its May 2026 meeting, pushing borrowing costs to the highest level since 2013, citing economic uncertainty. Headline inflation accelerated to 3.6% in April 2026 from 2.7%, although still within the 2–5% target range. Inflation is expected to climb above 5% if the Middle East conflict persists, amid fuel price hikes which threaten the central banks forecast of 3.6% average by year-end. Domestic economic activity has remained resilient despite slowing to 2.7% in the final quarter of 2025. Growth is nevertheless expected to moderate in 2026. Assuming the conflict is resolved by mid-2026, real GDP growth is projected to ease to 2.8%, down from the previous forecast of 3.3%. Governor Thakoor stated that future policy decisions will remain prudent, guided by inflation trends, the growth outlook, and broader economic developments.

The Central Bank of Mauritius unanimously decided to keep its key repo rate steady at 4.5% for the fourth consecutive meeting on February 11, 2026. The Committee said a cautious, wait-and-see approach remains appropriate, emphasizing the need to anchor medium-term inflation expectations amid ongoing economic uncertainties. The Bank noted that headline inflation rose slightly to 3.8% in January 2026, from 3.7% in December, but is expected to average 3.6% for the year, within the 2–5% target range and very close to the mid-point medium-term target of 3.5%. Meanwhile, domestic economic activity continues to be supported by services, namely tourism and financial services, while pending infrastructure projects are expected to boost construction and investment. Real GDP is projected at 3.3% in 2026, potentially rising to around 3.5% if capital projects accelerate and the African Growth and Opportunity Act is renewed.

The Central Bank of Mauritius unanimously decided to leave its key repo rate steady at 4.5% for the third consecutive time during its November 2025 meeting, citing the need to anchor medium-term inflation expectations against a backdrop of elevated economic uncertainty. The country's annual inflation eased to 4.1% in October from 4.4% in September, remaining within the Bank’s medium-term target range of 2-5%. Headline inflation for 2025 was revised down to 3.7% from 4% previously, on the back of softer commodity prices, easing global inflation, food subsidies, and lower fuel costs. For 2026, inflation is expected to converge toward the midpoint of the Bank’s target range, settling at 3.6%, though upside risks from global factors remain. Meanwhile, the Bank raised its 2025 real GDP growth forecast to 3.1%, up 0.1 percentage point from the August MPC projection, and expects growth of 3% in 2026, while cautioning that risks remain tilted to the downside.