The Mauritian central bank sees inflation breaching the upper limit of its target range by year-end, and its interest-rate policy decisions will hinge on how long price pressures are likely to endure, according to Governor Priscilla Muthoora Thakoor.
Annual average headline inflation , the Bank of Mauritius’ preferred measure, accelerated to 4.1% last month. With the Iran war dragging on, fuel and food prices have remained elevated, raising the likelihood that the measure will exceed the 2% to 5% band.
“We don’t know whether this breach will be short-lived or sustained,” Thakoor said in an interview in Port Louis, the capital, last week. “If inflation expectations show signs of being well anchored, then perhaps the central bank can afford to sit out a rate hike or to tighten by less.”
The bank’s monetary policy committee last raised borrowing costs by 25 basis points in May, bringing the key rate to 4.75%. It stood pat in August after revising its 2026 inflation forecast downward to 5% from 5.5%.
“There are a number of factors that would argue for a hike,” Thakoor said. “But, there are other factors that we will need to consider as well.”
Given that the Indian Ocean island nation of about 1.2 million people has a small open economy, the central bank monitors its peers’ policy decisions and their impact on interest-rate decisions and the nation’s assets.
Mauritius is a net food and fuel importer, and its trade gap is seen widening to 215 billion rupees ($4.54 billion) this year. The rupee has weakened 2.8% against the dollar so far this year, making it Africa’s eighth-worst performer.
The MPC will need to assess what impact those metrics will have on debt-servicing costs and economic growth, according to the governor. Gross domestic product is currently expected to expand 3% this year, down from 3.5% in 2025.
“The monetary policy committee will have to balance various tradeoffs in the central bank’s pursuit of its price-stability mandate and financial stability,” said Thakoor, who began her three-year term as governor in September last year. She previously worked as at senior economist for the International Monetary Fund.
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