The Central Bank of Madagascar (BFM) is tightening its monetary policy once again. Faced with the return of inflationary pressures, its Monetary Committee has decided to raise the key rate from 12.00% to 12.50%. This is the first increase after several months of status quo. According to the statement released this Wednesday, the objective is to contain price acceleration, preserve financial stability, and maintain inflation expectations around the 5% target in the medium term.
The Central Bank explains its decision by the interruption of the disinflation observed over several quarters. The key rate hike aims to curb this inflationary trend. According to BFM data, in June 2026, inflation reached 8.6% year-on-year, compared to 6.8% three months earlier. This acceleration is mainly due to core inflation, which climbed to 11.4%. This indicator, which excludes volatile products like rice and energy, reflects a more generalized price increase in the economy. During this period, energy prices rose by 3.9%, while rice prices fell slightly by 0.7%.
The BFM believes that previous maintenance of the key rate at 12% helped limit the scale of inflationary pressures. However, monetary conditions that eased significantly in the second quarter reduced the effectiveness of this policy and are no longer able to absorb inflationary pressures in the economy.
This decision also takes place in an international context marked by the persistent consequences of the conflict in the Middle East. Disruptions in supply chains, rising global prices for several raw materials, and increased maritime insurance costs continue to fuel price tensions. Added to this are internal factors, notably the revaluation of the minimum wage, which is likely to increase production costs.
The Central Bank also mentions the growth of the money supply, which increased by 15.1% in June, a pace higher than expected, driven by the rise in foreign assets and an 8.8% increase in bank credit over one year. This development, leading to an increase in liquidity in circulation, also sustains price tensions.
Captured & Published at: 2026-08-05 17:53:43 (Madagascar Local Time EAT)
Original Source: https://2424.mg/politique-monetaire-la-banky-foibeni-madagasikara-indique-relever-son-taux-directeur-a-1250-pour-freiner-le-retour-de-linflation/?utm_source=rss&utm_medium=rss&utm_campaign=politique-monetaire-la-banky-foibeni-madagasikara-indique-relever-son-taux-directeur-a-1250-pour-freiner-le-retour-de-linflation
