The Central Bank of Seychelles (CBS) has decided to keep interest rates unchanged for the first quarter of 2026, citing stable prices, steady domestic economic activity and the need to wait for the government budget to be finalised.
The decision was taken at a board meeting held on Monday 15 December. The main interest rate will remain at 1.75%. The rate charged to commercial banks when they borrow from the central bank will stay at 3.25%, while banks placing excess money with the CBS will continue to earn 0.25%. The minimum amount of money banks must keep in reserve will also remain unchanged at 10%.
Prices remain low, but risks ahead
The central bank said inflation in Seychelles has remained very low in 2025. In November, inflation stood at 0.02%, while the average inflation rate over the past 12 months was 0.5%.
CBS Governor Caroline Abel said lower fuel prices and reduced freight costs helped keep the prices of goods and services down. However, she warned that prices are expected to rise gradually in the coming months.
She added that a weaker Seychelles rupee, higher international food prices and new financial benefits announced by the government could increase demand for foreign currency, putting pressure on prices. Seychelles depends heavily on imports for daily consumption.
Tourism supports the economy
Tourism continues to be the main support for the local economy. By the end of November 2025, Seychelles recorded 361,422 visitor arrivals, an increase of 12% compared to the same period in 2024.
The CBS said the increase was supported by better air connections, including the return of seasonal flights and the arrival of new airlines. Tourism earnings from January to November were estimated to be 19% higher than during the same period last year.
Loans and borrowing
The central bank noted an increase in borrowing within the local economy. Over the past year, lending by commercial banks to the private sector rose by 10%.
Most of the loans were taken for housing, followed by personal loans. However, Governor Abel said the CBS has observed that some people with personal loans are finding it difficult to repay their debts.
She said the central bank is closely monitoring the situation, as rising repayment difficulties could pose risks to financial stability if left unchecked.
At the same time, the government reduced its debt by 10%, while public enterprises lowered their debt by 22%.
Exchange rate under pressure
The CBS said both the supply and demand for foreign currency increased in 2025 due to stronger local economic activity. However, demand grew faster than supply, leading to a weakening of the Seychelles rupee against major currencies.
Governor Abel said foreign exchange demand is expected to continue rising. If demand continues to outpace supply, the rupee could weaken further, which may result in higher prices for imported goods.
Budget still under review
The central bank said the decision to keep interest rates unchanged was also influenced by the fact that the government budget has not yet been passed.
“The board decided to maintain the current policy stance until there is a complete overview of the country’s budget and planned financial measures,” Governor Abel said.
The Central Bank of Seychelles said it will review its monetary policy again in March 2026 and remains ready to act if economic conditions change.