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# [MAURITIUS] Monetary Policy Under Pressure: Key Rate Raised to 4.75% as Inflation Persists
- URL: https://businessoi.media/en/maurice-politique-monetaire-sous-tension-le-taux-directeur-releve-a-4-75-face-a-une-inflation-qui-resiste-en/
- Published: 2026-10-14T02:54:18.000Z
- Updated: 2026-10-14T02:54:18.000Z
- Description: The Bank of Mauritius raised its key rate to 4.75% against projected inflation of 5.5%. The deficit could hit 7% of GDP if the Chagos Deal is not ratified. A full breakdown.
- Author: Emmanuel TAOCHY
- Tags: Maurice, Économie, finance, Finances publiques, Revue matinale, #en

**The Bank of Mauritius has tightened its grip.** Against a backdrop of persistent inflation and growing pressure on public finances, the central bank raised its key rate by 25 basis points to **4.75%**. A move described as *"timely and measured"* by the governor — but one that illustrates the scale of the macroeconomic challenge facing the island.

## Inflation That Lingers

The Bank of Mauritius projects inflation reaching **5.5%** in 2026\. In April, underlying inflation still stood at **6.1%**. Well below the historic peak of **11.3%** recorded in February 2023, but high enough to justify a rate adjustment. Pressures stem from a familiar mix: sustained public expenditure, a weakened rupee — depreciated roughly **30%** against the dollar over the past five years — and more expensive imports.

## Public Finances Under Pressure

The fiscal equation is complex. The absence of the **Rs 10 billion** expected under the *Chagos Deal* — not ratified by the British Parliament — could push the public deficit towards **6.9–7% of GDP**, against an initial forecast of 4.9%. Public debt is already around **90% of GDP**, a level that concerns both the IMF and rating agencies.

Between 2019 and 2024, the Bank of Mauritius transferred around **Rs 97 billion** to the government to support the economy through successive crises, with Rs 81 billion injected into the Mauritius Investment Corporation. A heavy monetary legacy that complicates today's normalisation.

## Solid Growth, but Real Vulnerabilities

The IMF projects growth of around **2.8%** for Mauritius in 2026 — respectable, but below earlier hopes. VAT, the main source of revenues, depends on household consumption that is slowing. The IMF and rating agencies are calling for fiscal consolidation and targeted support rather than across-the-board subsidies.

## Why It Matters

Mauritius remains the Indian Ocean's financial reference, ranked Africa's top investment destination by Bloomberg Economics 2026\. But its monetary and fiscal credibility must be preserved. Raising the key rate sends a reassuring signal to markets — the central bank is doing its job. Provided that public finances follow the same path of discipline.