The benchmark interest rate for credit in Mozambique, known as the “prime rate,” will remain at 15.50% throughout July, for the third consecutive month, the Mozambican Banking Association (AMB) announced on Monday (29). The decision comes after three consecutive rate cuts this year.
Since January 2024, the prime rate has been on a downward trend, after remaining at a high of 24.1% for six consecutive months. This year, the AMB cut the rate by ten basis points in January to 15.70%, kept it unchanged in February, lowered it again to 15.60% in March and to 15.50% in April, and decided to keep it unchanged in May, June, and now in July.
The evolution of the “prime rate” is directly linked to the MIMO rate, the key monetary policy rate set by the Bank of Mozambique. This rate influences the calculation of the reference rate applied by commercial banks and is one of the main instruments used to control inflation.
At its May 25 meeting, the Bank of Mozambique decided to keep the MIMO rate at 9.25%, increase the reserve requirement ratio for the national currency, and acknowledged that inflation could reach double digits due to the fuel crisis.
According to the governor of the Bank of Mozambique, Rogério Zandamela, “this decision stems from the prevailing high level of uncertainty regarding the duration of the conflict in the Middle East and its impact on the supply chain and the supply of goods, as well as on international and domestic prices for fuel and food.”
The decision was announced at the conclusion of the Monetary Policy Committee (CPMO) meeting, held in Maputo. The committee kept the MIMO rate unchanged, as it had done in March, following a cycle of 12 consecutive cuts over 24 months. Rogério Zandamela acknowledged that whether this pause in the cycle of rate cuts will continue will depend on developments in the domestic and international context.
In addition, the CPMO decided to increase the reserve requirement ratio for liabilities in local currency from 29% to 39% of the deposits that commercial banks must maintain at the central bank, “with the aim of absorbing excess liquidity in the banking system, which could generate greater inflationary pressure.” The reserve requirement ratio for foreign-currency liabilities, however, remained at 29.5%.
Rogério Zandamela also announced that the inflation forecast had been “revised upward.” He noted that annual inflation stood at 4.4% in April, following 3.4% in March, but warned that, “in the short and medium term, inflation is expected to accelerate and could reach double digits, depending on the duration of the conflict in the Middle East,” due to rising fuel prices, supply disruptions, and imported inflation.
Data previously released by the National Institute of Statistics (INE) indicate that prices in Mozambique rose 2.32% in May, bringing year-over-year inflation to 7.22%, in a month marked by rising fuel prices. Despite this, cumulative inflation in 2025 stood at 3.23%, below the rate recorded in 2024 and the government’s forecast, while the MIMO rate remains fixed at 9.25%, following successive cuts that began in January 2024.
Source: Lusa
