Central Bank of Mauritius Hikes Policy Rate to 5%

The Central Bank of Mauritius unanimously decided to lift its key repo rate by 25 bps to 5% during its November 2026 meeting, marking the first hike since May. The decision aimed to address persistent inflationary pressures, as the prolonged Iran conflict has driven up global fuel and food prices, increasing imported inflation in the highly import-dependent Mauritian economy. The Commitie highlighted that a proactive action was required to contain inflation. Headline inflation accelerated for the fourth consecutive month to 6.4% in October, up from 5.7% in September and reaching its highest level since June 2023. This marked the second consecutive month that inflation breached the central bank’s target band of 2% to 5%. The central bank now forecasts inflation of 4.7% in December this year and 5.5% in December 2027. Growth projections were raised to 3% in 2026 from a previous estimate of 2.8% in August.

The Central Bank of Mauritius unanimously decided to leave its key repo rate steady at 4.75% on August 12, 2026, after raising it by 25 bps in May. Policymakers said the cautious stance reflects a highly uncertain environment, allowing the MPC to assess incoming data, inflation and growth risks, and the impact of previous measures. Headline inflation rose to 4.4% in July from 3.7% in June, while core inflation remained elevated, with risks remaining tilted to the upside. Still, the Bank lowered its 2026 inflation forecast to around 5% from 5.5%, reflecting recent inflation trends and budget measures, including additional subsidies on selected staple goods. Meanwhile, it noted that economic activity slowed in Q1 but remained resilient, supported by tourism and financial services. Growth is forecast at 2.8% in 2026, unchanged from May, with downside risks from geopolitical tensions, supply disruptions and weaker demand.

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.