Tunisia's Central Bank has decided to keep its key interest rate unchanged at 7%, citing ongoing inflationary pressures and risks surrounding the price trajectory. The decision was made during a meeting of the bank's board of directors on Wednesday. The bank noted that inflation continued to rise, reaching 5.6% in September, up from 5.4% in August. This increase is largely attributed to a 13% rise in fresh food prices over the past year.
The central bank observed that the underlying inflation, which excludes fresh food and products with controlled prices, remained stable at 5.1% for the third consecutive month. However, the economic growth slowed down to 2.3% in the second quarter of 2026, down from 2.6% in the first quarter. This slowdown is primarily due to a significant decline in industrial activity. The bank's board highlighted the impact of rising global energy prices on Tunisia's economy.
The increase in global energy prices led to a substantial rise in Tunisia's energy import bill, which reached 11.3 billion dinars by the end of August 2026, up from 8.8 billion dinars in the same period of 2025. This surge contributed to a widening of the current account deficit to 4.694 billion dinars, equivalent to 2.5% of the country's GDP, during the first eight months of 2026.
In response to these challenges, the central bank emphasized the importance of maintaining an adequate level of foreign currency reserves. The bank's foreign currency reserves stood at 23.7 billion dinars, enough to cover 92 days of imports, as of October 6, 2026. This represents a decline from 24.3 billion dinars and 104 days of imports in the same period last year.
The central bank also noted that the global energy price hikes have become significantly higher than previously forecast in June 2026. The bank expressed concerns that sustained high energy prices would limit the economy's maneuvering room and increase economic and financial vulnerabilities. The risks surrounding the future inflation trajectory are also seen as upward-biased due to ongoing domestic and external inflationary pressures.
In light of these factors, the central bank's board confirmed its commitment to closely monitoring price developments, demand, banking liquidity, and external balances. The bank stands ready to take necessary measures to mitigate pressures on prices and support a sustainable return of inflation to manageable levels.
The central bank's decision to maintain the key interest rate at 7% reflects its cautious approach to managing inflation and stabilizing the economy. The bank's actions aim to balance the need to control inflation with the goal of supporting economic growth. Tunisia's economic challenges, including high inflation and a widening current account deficit, require careful management to ensure stability.
Key points
- The Central Bank of Tunisia maintains the key interest rate at 7% amid rising inflation and economic challenges.
- Inflation in Tunisia reached 5.6% in September, driven by a 13% increase in fresh food prices.
- The country's foreign currency reserves stood at 23.7 billion dinars, enough to cover 92 days of imports, as of October 6, 2026.
