Bank of Mauritius Raises Key Interest Rate to 5% to Fight Inflation

The Bank of Mauritius has tightened monetary policy again, raising its key interest rate from 4.75% to 5% following a unanimous decision by its Monetary Policy Committee on Wednesday, 11 November 2026.

The Monetary Policy Committee, known as the MPC, is the body within the Bank of Mauritius responsible for setting the benchmark rate that influences borrowing costs across the entire economy. When this rate rises, commercial banks typically pass on the increase through higher interest rates on loans and mortgages.

The central bank said the move was necessary to prevent inflation from becoming entrenched above its target band of 2% to 5%. The data behind the decision paints a worrying picture for household budgets across the island.

Overall inflation, measured as a 12-month average, climbed from 4% in July to 4.3% in October 2026. More strikingly, the year-on-year inflation figure jumped sharply from 4.4% to 6.4% over the same period, well above the upper end of the central bank's comfort zone.

The breadth of price increases is also widening. According to Bank of Mauritius figures, 47% of items in the Consumer Price Index were rising by more than 5% in October, up from 33% in January. At the same time, the share of items actually falling in price dropped from 23% to just 12%. In plain terms, more goods and services are getting more expensive, and fewer are getting cheaper.

The Bank of Mauritius cited a combination of global pressures driving these trends: geopolitical tensions, rising energy costs, surging food commodity prices, and the effect of drought conditions on local agricultural output.

What this means for Mauritians: anyone with a variable-rate home loan, personal loan or business credit line can expect their monthly repayments to increase as commercial banks adjust to the higher benchmark rate. For savers, the flip side is that deposit rates may also edge upward. The rate increase signals that the central bank views controlling inflation as the priority, even at the cost of making credit more expensive at a time when many households are already under financial pressure.

The decision has drawn political attention. Opposition figures have already voiced concern about the impact on families. The MPC will continue to monitor economic data and may adjust the rate further at future meetings depending on how inflation evolves.

Source: ION News