Maputo, 24 Mar (AIM) – The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Monday, decided to keep its benchmark interest rate, known as the MIMO rate, at 9.5 per cent.
A statement from the CPMO said the decision not to cut interest rates resulted from “the substantial worsening of some of the risks and uncertainties associated with the projections for inflation”.
The most prominent of these risks was the US and Israeli aggression against Iran “and its impacts on the logistical chain and on the supply and prices of energy products and foodstuffs”.
The near immediate result of the American-Israeli attacks was a dramatic increase in the price of oil. The price of a barrel of crude soared to over 100 US dollars – although the price has subsequently fallen, as the market reacts to the various contradictory declarations made by US President Donald Trump.
The war started by Trump influenced a revision upwards of the forecasts for inflation. The CPMO statement says that the war interrupted the cycle of interest rate reductions that had begun in January 2024.
Any further cut in interest rates would depend on how the domestic and external risks and uncertainties develop.
The war against Iran was far from the only uncertainty, The CPMO said it is unclear how damaging the January storms and floods have been on logistics and supplies, and how long it would take to restore productive capacity.
Fiscal risks remained persistent, warned the CPMO, “particularly the delays in payments owed by the State”.
The forecasts of inflation had risen. As measured by the National Statistics Institute (INE), the annual inflation rate had risen from three per cent in January to 3.2 per cent in February.
Underlying inflation, which excludes fruit, vegetables and goods with administered prices has remained stable. But in the short to medium term, prices are likely to rise, the CPMO added, due to the effects of the recent floods, and of the US/Israeli war against Iran.
The statement forecasts moderate economic growth. In the fourth quarter of 2025, Mozambican Gross Domestic Product grew by 4.7 per cent, after shrinking by 0.9 per cent in the previous quarter “reflecting improved performance in all sectors of activity”.
The CPMO envisaged, over the short to medium term, “a gradual recovery in economic activity, but at a slower pace, due to the effects of climatic shocks and the likely slowdown in the world economy, due to the conflict in the Middle East”.
The CPMO warned that domestic public indebtedness is continuing to grow, “affecting the normal functioning of the financial market”.
By February domestic public debt had risen to 487.3 billion meticais (about 7.6 billion US dollars, at the current exchange rate), an increase of 127.7 billion meticais, compared with December 2025.
There were persistent delays by the State in paying the domestic debt, which meant that domestic debt titles were no longer attractive.
(AIM)
Pf/ (494)
