The Bank of Mozambique once again lowered the monetary policy interest rate (MIMO) this Monday (29), this time by 0.50 percentage points, setting it at 9.75%. This marks the tenth consecutive cut since January 2024, totaling a cumulative reduction of 700 basis points.
The announcement was made by the governor, Rogério Zandamela, at the end of the Monetary Policy Committee (CPMO) meeting in Maputo, stressing that the decision is based on maintaining single-digit inflation forecasts in the medium term.
“This measure essentially stems from the continued outlook for single-digit inflation, reflecting in part the stability of the exchange rate and favorable trends in international commodity prices, despite the persistence of high domestic risks and uncertainties,” he said.
Since September 2022, the benchmark rate had been set at 17.25%, with the central bank initiating a downward trajectory starting in January 2024.
The rate then dropped to 16.5%, followed by cuts in nearly every bi-monthly meeting: March (15.75%), May (15%), July (14.25%), September (13.5%), November (12.75%), January 2025 (12.25%), March (11.75%), May (11.00%), July (10.25%), and now September (9.75%).
The governor noted that the interest rate normalization process, launched in 2024, was completed within the initially planned 24- to 36-month horizon, benefiting households, companies, and the state itself. “It was a huge gain for the system,” he said, although he acknowledged that reference rates offered by commercial banks to clients did not fully follow the decline, having fallen by around 600 basis points over the same period.
Zandamela, however, cautioned that the future trajectory will be more gradual. “The CPMO will continue the process of normalizing the MIMO rate in the medium term, but in modest magnitudes – increasingly modest, I would say. The pace and magnitude will continue to depend on inflation forecasts, as well as the assessment of medium-term risks and uncertainties,” he stressed.
Regarding the economy, the central bank projects a gradual recovery, supported by liquefied natural gas (LNG) production and the implementation of projects in strategic areas.
However, risks remain high. The governor highlighted three key factors that could put pressure on inflation in the coming months: worsening fiscal conditions, climate shocks, and slow recovery of productive capacity and the supply of goods and services.
According to the CPMO statement, domestic public debt continues to rise, standing at 454.4 billion meticais in August, up 38.8 billion compared to December 2024, impacting the functioning of the government securities market.
The next committee meeting is scheduled for November 20, 2025.
By: Felisberto Ruco
