Bank of Mauritius Raises Key Rate to 5% to Curb Rising Inflation

The Bank of Mauritius (BoM), the island's central bank, raised its benchmark interest rate from 4.75% to 5% on 11 November 2025, in a move designed to bring projected inflation back under control before it becomes entrenched.

The decision follows updated forecasts showing that headline inflation in Mauritius is expected to climb to 4.7% by December 2026 and further to 5.5% in 2027, both above the central bank's target range. By acting now, the BoM aims to avoid having to impose a sharper, more disruptive rate increase later.

The key rate, known in French as the taux directeur and in English as the repo rate or policy rate, is the interest rate at which the BoM lends money to commercial banks. When this rate rises, borrowing becomes more expensive throughout the economy. Banks pass the higher cost on to consumers and businesses through increased loan and mortgage rates, which in turn tends to slow spending and reduce upward pressure on prices.

This is the latest in a series of monetary policy adjustments the BoM has made as Mauritius, like much of the world, navigates a period of elevated prices driven by global supply pressures, currency movements and domestic demand.

What this means for residents and borrowers: anyone with a variable-rate home loan, personal loan or business credit line can expect their monthly repayments to increase, possibly within weeks, as commercial banks adjust their lending rates in line with the new policy rate. First-time buyers and those mid-way through long-term mortgages will feel the impact most directly. Savers, on the other hand, may benefit from marginally better returns on deposits.

For businesses, higher borrowing costs can slow investment and expansion plans, particularly for small and medium enterprises that rely on credit to operate. Importers may also face a double pressure if the rate increase affects the exchange rate of the Mauritian rupee.

The BoM's Monetary Policy Committee meets regularly throughout the year to review economic conditions and adjust the policy rate accordingly. Its mandate includes maintaining price stability while supporting sustainable economic growth in Mauritius.

The central bank has signalled that the pace and direction of future rate changes will depend on how inflation data evolves over the coming months. If inflation pressures ease, the BoM could hold rates steady or eventually reduce them. If prices continue to rise faster than forecast, further increases remain on the table.

Source: Le Defi Media