The Bank of Mauritius raised its key rate by 25 basis points in May 2026, taking it from 4.50% to 4.75% — the first increase in more than a year. This monetary tightening comes amid rising inflationary pressures and geopolitical uncertainty, notably linked to tensions in Iran and their knock-on effects on energy markets.
Imported inflation: the cascade effect
The central bank expects average inflation of around 5.5% in 2026 in its central scenario. In adverse scenarios, this pressure could be stronger and last longer. The inflation is described as "imported": rising energy prices cascade into transport, utilities, processed food and personal services. Mauritian households are already feeling a squeeze on purchasing power from higher fuel and electricity costs.
Growth cut to 2.8% from 3.3–3.5%
The direct consequence of this inflationary shock is a downward revision of the growth outlook. The Bank of Mauritius now forecasts 2.8% growth in 2026, down from the 3.3–3.5% range expected at the start of the year. Tourism is under particular scrutiny: a slowdown in arrivals is weighing on one of the Mauritian economy's strongest pillars.
The rate had been stable at 4.50% since February 2025. The decision to raise it reflects a determination to anchor inflation expectations and send a vigilance signal to markets.
Why it matters
For investors and companies operating from Mauritius — the Indian Ocean's financial hub — a higher key rate means higher credit costs and a clear message: the central bank's priority is now inflation control before growth support. A difficult trade-off in an unstable global environment.
Sources: Bank of Mauritius (bom.mu), CNBC Africa, Trading Economics, PropertyCloud Mauritius, May 2026.