(Bloomberg) -- Madagascar’s central bank raised its key interest rate for the first time in a year due to concerns over persistent inflation.
After standing pat on rates at three successive meetings, the monetary policy committee lifted the key rate to 11.5% from 11%, the Antananarivo-based Banky Foiben’i Madagasikara said in a statement on Tuesday.
The economy has been battling persistent inflation since the beginning of 2024, the central bank said, after a quarterly meeting of the MPC. Restrictive monetary conditions linked to a prudent demand management by the central bank is required to curb inflationary pressures, it said.
Annual inflation has so far averaged 7.3% this year in part due to the high price of rice, a staple.
“An analysis of the causes of price increases shows a certain distortion on the supply side, hampering their decline, as in the case of certain locally-produced foodstuffs, rice in particular,” the central bank said. “Rice prices didn’t follow the seasonal drops expected during the harvesting period,” it said in a separate document. This situation is different from the pre-pandemic era when rice prices dropped significantly at each harvest, it said.
The move makes the world’s biggest supplier of vanilla an outlier among African central banks at a time when most are leaving rates unchanged.
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