The Monetary Policy Committee (MPC) at the Bank of Mauritius (BoM) met on May 20 and unanimously voted in favour of the Key Rate being raised by 25 basis points from 4.50 per cent to 4.75 per cent per annum.
Discussion hovered on the uncertain global economic environment on the back of escalating global tensions in the Middle East, where theStrait of Hormuz led to a tightening of global energy supply conditions, ushering into cascading effects on commodity markets, shipping costs, and investor confidence.
In context, the IMF in the April 2026 World Economic Outlook report has revised downwards the global growth to 3.1 per cent for 2026, in relation to the earlier forecast of 3.3 percent in January 2026.
The economic activity on the domestic front is said to be broadly resilient, supported by a sustained performance across key sectors. However, moderate growth is anticipated in 2026, as a result of the impact of higher fuel and electricity prices impacting household purchasing power and softer tourist arrivals.
Based on the bank’s baseline scenario and assuming conflict resolution with expectations of the Strait of Hormuz to be opened by the year’s first half end, real GDP growth is poised to reach 2.8 per cent in 2026 as against an initial forecast of 3.3-3.5 percent.
The Bank says it continues to monitor the level of excess liquidity in the banking system to help ensure the short-term market rates are aligned with the Key Rate in the same vein as conditions prevailing in the domestic foreign exchange market.
Governor at the BoM, Dr. Priscilla Muthoora Thakoor commented: “There was consensus within the MPC that raising the Key Rate by 25 basis point was best aligned with the Bank’s mandate to keep price stability in an orderly manner, along with balanced economic development. The MPC viewed that a timely and measured adjustment would help maintain monetary policy credibility and reinforce the central bank’s commitment to price stability while at the same time, contributing to preserving confidence among households, businesses and investors.”
She also underlined that the domestic conditions remain sufficiently resilient to help absorb a moderate increase in interest rates. At the same time, financing conditions are expected to continue to support productive economic capacity, while the banking sector remains liquid, sound, and well-capitalised.
“The MPC wishes to emphasise that the decision to raise rates is a calibrated response intended to reinforce price stability at a time of elevated external risk while maintaining support for sustainable economic growth over the medium term,” the Governor added.
