Madagascar's central bank is tightening monetary policy. The Ministry of Economy and Finance (MEF), meanwhile, wants to prevent the fight against inflation from slowing investment. For both parties, the challenge is to preserve the balance between price stability and economic recovery, a dual challenge authorities must address. Yesterday, the Banky Foiben'i Madagasikara (BFM) announced an increase in its key rate from 12% to 12.5%, following an acceleration of inflation to 8.6% in June, compared to 6.8% at end-March. This decision was made after a lengthy observation period, according to BFM Governor Aivo Handriatiana Andrianarivelo. Core inflation, excluding volatile products like rice and energy, reached 11.4%. The central bank aims to bring price increases toward its medium-term target of 5%. For households, this battle plays out in the daily shopping basket. Inflation erodes purchasing power for vulnerable families. For businesses, it increases costs and delays investments. Economy and Finance Minister Dr Ramiarison Herinjatovo Aimé emphasizes the need to preserve a stable macroeconomic framework and confidence. The effectiveness of this increase depends, however, on its transmission to the banking system, where liquidity remains abundant. In June, the money supply grew 15.1% due to external assets, while bank credit increased only 8.8%. This excess liquidity can dampen the impact of the key rate if banks make limited use of BFM refinancing. In short, the challenge is to direct resources toward the real economy. The MEF is working on evolving bank credit, complemented by the FNDI and FANDROSO program, to support SMEs, entrepreneurship, production, and employment.