On Tuesday 4 February 2025, the Monetary Policy Committee (MPC) of the Bank of Mauritius (BoM) held a meeting under the chairmanship of Rama Sithanen, Governor of this institution. Following deliberations, the Committee declared an increase in the benchmark interest rate from 4% to 4.5%, representing an increase of 0.5%. This decision was influenced by three main factors: the persistent inflation still affecting the local economy, the fall in the value of the rupee and the interest rate differential between Mauritius and certain other countries.
The Central Bank of Mauritius has raised its key rate by 50 basis points, from 4% to 4.50%. Speaking to the press on February 4th 2025, the Chairman of the Monetary Policy Committee (MPC) of the Bank of Mauritius (BoM) and Governor of the BoM, Rama Sithanen, explained the reasons for the increase. Inflation remains a risk, with an estimate of 3.7% in 2025, driven by global trade disputes and a liquidity glut that reduces the efficiency of monetary policy.
“The MPC examined in depth the developments taking place at global and national level and deliberated on their implications for national growth and inflation trajectories for 2025. The MPC deliberated, noting that at this stage all monetary policy members are more focused on the need to ensure that inflation expectations remain appropriately anchored over the medium term to the banking stability mandate.”
Rama Sithanen, Governor of the Bank of Mauritius – Mauritius
According to the Governor of the Bank, despite these obstacles, the economy is expanding strongly, driven by the construction sector, financial services, tourism and trade. He added that the increase was aimed at stabilising prices, supporting the rupee and strengthening the impact of monetary policy.
“The NPC deliberated on the fact that proactive policy measures were needed to mitigate any risk of a spike in inflation by addressing in a sustainable manner some of these contributing factors namely containing excess liquidity in the system and reversing the negative interest rate differential with major foreign currencies.”
Rama Sithanen, Governor of the Bank of Mauritius – Mauritius
According to the Bank of Mauritius, the main economic sectors should post positive performances in 2025. The financial institution forecasts growth of between 3.5% and 4.0% for 2025. The output gap should remain positive and contribute to underlying inflationary pressures.
