Madagascar's Central Bank (BFM) held its key policy rate at 12.50% at its November 2026 monetary policy committee meeting, confirming its restrictive stance against inflation running at 8.6% year-on-year according to the latest published indices. The decision was expected by markets, which had anticipated a stabilisation following the rate-hiking cycle initiated since 2024.
The 8.6% inflation rate remains well above the BFM's 5-6% target, driven primarily by the ariary's depreciation against the dollar (−12% since January 2026) and rising imported food prices. Basic food staples — rice, oil, flour — recorded price increases of between 15% and 22% over twelve months, particularly penalising low-income households.
The BFM Governor stressed at a press conference that maintaining the rate at 12.50% aims to anchor inflation expectations and support the ariary, whose stability is crucial to controlling imported inflation. Positive signals exist nonetheless: foreign exchange reserves increased by 8% in Q3 2026, reaching the equivalent of 3.2 months of imports, partly thanks to disbursements from multilateral donors.
For Madagascar's private sector, a 12.50% policy rate implies bank lending rates of around 20-25%, making investment financing particularly costly. Small and medium enterprises, which make up the bulk of the formal economy, are the most affected by this credit contraction.
Regional economists are watching Madagascar's trajectory closely. A monetary easing cycle could begin in H1 2027 if inflation retreats toward 7% and the ariary stabilisation holds. The BFM is conducting regular foreign currency liquidity injections to support the exchange rate on the interbank market.