The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided Wednesday to maintain the monetary policy interest rate, (MIMO rate), at 13.25%, it announced in a statement.
“The decision is justified by the prevalence of high risks and uncertainties, notwithstanding the downward revision of the inflation outlook in the short and medium term,” the committee explained.
It expects “a smaller increase in prices, mainly reflecting the tendency for the metical to appreciate due to the measures taken at the last CPMO session, in a context of weak economic activity,” it added.
In January, the committee increased the MIMO rate by 300 basis points, raising it to the current 13.25%.
According to the Bank of Mozambique, foreign exchange pressure has reduced substantially, with demand for foreign currency being “fully satisfied,” as a result of “greater fluidity observed in the foreign exchange market, contrary to the trend recorded at the beginning of the year.
The metical appreciated, with each dollar becoming worth 73.35 meticals after having been 75.11 at the end of January, the bank detailed.
Today, the committee also decided to maintain the interest rates of the Permanent Deposit Facility (FPD) at 10.25% and the Permanent Assignment Facility (FPC) at 16.25%, as well as the Obligatory Reserves (RO) coefficients for liabilities in national currency and foreign currency at 11.50% and 34.50%, respectively.
The Bank of Mozambique maintains the “outlook for a timid recovery in economic activity in 2021,” following a 1.3% contraction in Gross Domestic Product in 2020, repeating a call for “structuring reforms in the economy.”
The procurement and logistics of administering covid-19 vaccines, mitigation of the socio-economic impact of climate shocks, as well as expenses arising from the unstable military situation, especially in the northern part of the country, are justifying a worsening of the budget deficit, the central bank warned.
Gross international reserves “remain at comfortable levels” at around $3 987 million, “enough to cover more than six months of imports of goods and services.”
The next meeting of the CPMO is scheduled for May 19, 2021.
