The Monetary Policy Committee of the Bank of Mozambique decided to maintain the monetary policy interest rate, MIMO rate, at 10.25%.
According to a statement from the Bank of Mozambique, the decision is justified by the continued prospects of accelerating prices in the medium term, associated with high risks and uncertainties, in a context of expected slow recovery of economic activity in 2021.
The Monetary Policy Committee reiterates that mitigating prevailing risks and promoting sustainable and inclusive growth requires further structural measures.
It also decided to maintain the interest rates of the Deposit Facility and the Sending Facility at 7.25% and 13.25% respectively, as well as the Coefficients of Mandatory Reserves for liabilities in domestic and foreign currency at 11.50% and 34.50% respectively.
According to the document, the forecasts of acceleration of inflation for the short and medium term are maintained, but are still at one digit.
Annual inflation rose for the third consecutive month, to 3.27% in November, after 3.20% last October, the Bank of Mozambique noted in detail
For 2021, domestic prices are expected to increase, essentially reflecting the effect of the expiry of part of the government’s price containment measures under covid-19 and the upward trend in food prices on the international market, in addition to the gradual recovery in demand for goods and services.
The Central Bank notes in the note, which we are quoting, that the extension of the VAT exemption on essential goods until 2023 could dampen inflation, leaving this indicator in the one-digit band, in line with the expectations of economic agents.
