The Bank of Mauritius has raised its key interest rate from 4.75% to 5% in a unanimous vote by its Monetary Policy Committee. This change affects loans, mortgages, and overdrafts across the island, making borrowing more expensive. The decision was driven by rising inflation, which reached 6.4% in October, up from 4.4% in July.
The increase in inflation is widespread, with 47% of goods and services in the consumer basket rising by more than 5% in October, compared to 33% in January. The share of items getting cheaper decreased from 23% to 12%. The central bank expects inflation to remain above its 2% to 5% comfort band into 2027, partly due to a long drought pushing up food costs.
Despite the inflationary pressures, the Bank of Mauritius still forecasts the economy to expand by 3% this year. The growth is expected to be driven by financial services, insurance, and tourism, while construction and manufacturing lag behind. To combat inflation, the bank is using monetary policy tools, including raising interest rates, which will make borrowing more expensive for households.
In other news, the BIOT Court of Appeal in London is set to rule on four Chagossians who attempted to return to their home island. The case has been ongoing for months, with the four individuals, including Misley Mandarin, landing on Île du Coin in the Peros Banhos atoll in February. The court will decide whether a 2004 rule that stripped Chagossians of their right to live on the island is still valid.
Mauritius has also signed three partnership agreements with Mauritius Telecom to strengthen public health services. The deals focus on autism support, cardiology, and dialysis, areas where patients often face long waiting times for specialized care. The partnerships aim to improve healthcare services for these patients.
The island nation is set to host the first African continental cup of STEM Racing's school engineering contests in 2028. STEM Racing has partnered with the Unicity Education Hub and the Medine group to make this event a reality. This initiative aims to promote science, technology, engineering, and mathematics education among African youth.
In related news, Mauritius has received 120 new weather stations as part of a regional climate program run by the Indian Ocean Commission. The meteorological, hydrological, and marine tracking units are valued at approximately Rs 163 million, or $3.4 million. The equipment will help the island better prepare for droughts and extreme weather events.
Key points
- The Bank of Mauritius raised its key interest rate to 5% to combat rising inflation.
- The central bank expects inflation to remain above its comfort band into 2027.
- Mauritius will host the first African continental cup of STEM Racing's school engineering contests in 2028.
