Central Bank cuts interest rate

Maputo, 15 Nov (AIM) – The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Friday, reduced the bank’s benchmark interest rate, the MIMO rate, by 25 base points, from 9.75 to 9.5 per cent.

The governor of the Central Bank, Rogério Zandamela, told a press conference that this was a “modest reduction”. The Bank of Mozambique had been unable to make further cuts in the MIMO rate because of “the worsening risks and uncertainties associated with the inflation projections, particularly the delays in the State paying the instruments of domestic public debt”.

Nonetheless, Zandamela was optimistic that, over the medium term, inflation will remain in single digits (i.e. less than ten per cent a year). The annual inflation rate has continued to slow. Zandamela said it fell from 4.9 per cent in September to 4.8 per cent in October.

The forecast for continued single digit inflation, he added, was due to the stability of the national currency, the metical, and to the favourable trend in international commodity prices.

Zandamela warned that domestic public indebtedness is continuing to worsen, with an impact on the normal functioning of the financial market. The domestic public debt now stood at 465.8 billion meticais (about 7.3 billion US dollars, at the current exchange rate), an increase of 50.3 billion meticais, when compared with December 2024.

The State’s failure to repay the domestic debt on time, Zandamela added, was reducing the interest in purchasing public debt titles, and contributed to the rigidity of interest rates on the interbank money market.
(AIM)
Pf/ (265)