The Bank of Mozambique (BdM) reduced the monetary policy interest rate (MIMO) to 9.5% this Friday (14), marking the 11th consecutive cut. The decision comes despite concerns about delays in the payment of domestic public debt, which continue to affect the financial market.
“This modest reduction reflects the worsening risks and uncertainties associated with inflation prospects, particularly the delay in the State’s payment of domestic public debt instruments. Inflation prospects remain in single digits in the medium term. In October 2025, annual inflation stood at 4.83% after 4.93% in September,” stated BdM Governor Rogério Zandamela in Maputo, following the Monetary Policy Committee (CPMO) meeting.
The key interest rate had been set at 17.25% since September 2022, after intervention by the BdM, and consecutive cuts began on 31 January 2024, when it fell to 16.5%. In March of the same year, the rate was reduced to 15.75%, continuing successively until reaching 9.75% in September, and now 9.5%.
Rogério Zandamela warned that “domestic public indebtedness continues to worsen,” affecting the normal functioning of the financial market. He detailed that domestic public debt, including loan and lease contracts, and unpaid financial obligations, amounts to MZN 465.8 billion (USD 7.2 billion).
This figure represents an increase of MZN 50.3 billion (USD 780.3 million) compared to December 2024. Payment delays by the State have reduced appetite for government securities and made interbank market interest rates more rigid, increasing risks for the economy. “The risks and uncertainties associated with inflation prospects remain high. In the medium term, beyond the effects of climate shocks and the slow restoration of productive capacity and supply of goods and services, the delay in payment of domestic public debt instruments by the State stands out,” added Zandamela.
In this context, the CPMO reaffirmed its commitment to maintaining a prudent monetary policy aimed at macroeconomic stability. The governor emphasized that, “given the worsening of risks and uncertainties, monetary policy posture will henceforth be conditioned on the assessment of underlying risks and uncertainties regarding inflation prospects.”
The CPMO meets every two months, with the next session scheduled for 28 January 2026, when new decisions may adjust monetary policy according to the country’s economic conditions.
Source: Lusa
