Tunisia's central bank has decided to keep its key interest rate unchanged at 7%, citing persistent 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 was largely driven by a 13% year-on-year rise in fresh food prices.
The central bank's board observed that the implicit inflation rate, which excludes fresh food and products with controlled prices, remained stable at 5.1% for the third consecutive month. However, the bank expressed concerns about the economic growth, which slowed to 2.3% in the second quarter of 2026, down from 2.6% in the first quarter. This decline was mainly attributed to a significant drop in industrial activity.
The bank's board also noted that the country's external balances have been under pressure due to a surge in global energy prices. The value of energy imports increased to 11.3 billion dinars by the end of August 2026, up from 8.8 billion dinars during the same period in 2025. This led to a widening of the current account deficit to 4.694 billion dinars, equivalent to 2.5% of the country's GDP.
The central bank's net foreign exchange reserves stood at 23.7 billion dinars, equivalent to 92 days of imports, as of October 6, 2026. This represents a decline from 24.3 billion dinars and 104 days of imports a year ago. The bank emphasized the importance of maintaining an adequate level of foreign exchange reserves, particularly by controlling the energy deficit and mitigating its impact on external payments.
The bank's board also discussed the international economic situation, noting a significant increase in global energy prices in recent times. These prices are now substantially higher than those assumed in the bank's previous forecasts made in June 2026. The bank expressed concerns that sustained high energy prices would limit the economy's room for maneuver and increase economic and financial vulnerabilities.
The central bank's board believes that the risks surrounding the future inflation trajectory are still tilted upwards, given ongoing domestic and external inflationary pressures. In response, the bank has pledged to continue closely monitoring price developments, demand, and banking liquidity, as well as external balances. The bank remains prepared to take necessary measures to mitigate inflationary pressures and support a sustainable return to tolerable inflation levels.
The bank's decision to maintain the key interest rate at 7% reflects its cautious approach to monetary policy in the face of rising inflation and external challenges. The bank's next steps will depend on its ongoing assessment of the economic situation and its commitment to maintaining price stability.
Key points
- Tunisia's central bank keeps key interest rate at 7% amid rising inflation and energy prices.
- Inflation in Tunisia reaches 5.6% in September, driven by fresh food prices.
- The country's external balances are under pressure due to a surge in global energy prices.
