Mauritians Furious as Interest Rate Rises to 5% Amid Cost-of-Living Crisis

The Bank of Mauritius raised its key policy interest rate by 25 basis points on Wednesday, November 11, moving from 4.75% to 5%. The decision was made by the Monetary Policy Committee, the body responsible for setting borrowing costs in Mauritius. Within hours, the announcement triggered a wave of angry, anxious and sometimes ironic responses on social media.

For many Mauritians, the rate hike felt like one blow too many. The country has been grappling with rising prices for some time, and household budgets are already stretched. The increase means that variable-rate loans, including mortgages and personal loans, will become more expensive to service, extending repayment periods and increasing monthly costs.

One commenter captured the frustration bluntly, asking in Mauritian Creole whether people should choose between paying their loan or eating, wondering how many families will find themselves in that exact situation. Another warned that those with existing loans will never see them paid off if the repo rate keeps climbing.

Civil servants who borrowed through the Mutual Aid, a cooperative lending scheme available to public sector employees in Mauritius, appear to be among the hardest hit. Several social media users pointed out that their loan repayment periods could extend by five to ten years as a result of the rate change.

The timing has added to the frustration. The hike comes roughly two years after the November 2024 general election, and some commenters used the opportunity to question the government's economic choices and its broader record in managing the cost of living.

What this means for borrowers: when the Bank of Mauritius raises its key rate, commercial banks typically follow by increasing the interest rates on loans. If you have a variable-rate loan, your monthly repayment may rise or your loan term may be extended. Those with fixed-rate loans are protected for now, but anyone refinancing or taking out a new loan will face higher costs. The goal of raising rates is to slow inflation by making borrowing more expensive, but the trade-off is that it squeezes households that are already under financial pressure.

The Bank of Mauritius has indicated that controlling inflation remains its priority. However, critics argue that higher rates punish ordinary borrowers without addressing the structural causes of rising prices in a small island economy that imports most of what it consumes.

Public sentiment on social media reflects a wider anxiety: that wages and purchasing power are not keeping pace with the cost of food, housing and loan repayments, and that each incremental rate rise pushes more families toward financial difficulty.

Source: ION News