Mozambican banks have decided to keep the benchmark interest rate for credit unchanged at 15.70% in February, contrary to the recent decision by the Bank of Mozambique (BdM) to reduce the monetary policy rate.
The decision was announced by the Mozambican Banking Association (AMB) after the BdM cut the reference interest rate, known as the prime rate, by 0.10 percentage points in January.
Since January 2024, the prime rate has been on a gradual downward trajectory, after remaining at historic highs of 24.1% for six consecutive months, reflecting the adjustment of the financial market.
Changes in the prime rate are directly linked to the monetary policy interest rate, the MIMO rate, set by the central bank. This rate influences the formula for calculating the prime rate and is one of the main instruments for controlling inflation.
At its meeting on January 28, 2026, the Monetary Policy Committee (CPMO) decided to cut the MIMO rate by 0.25 percentage points for the 12th consecutive time, setting it at 9.25%. The central bank now expects the rate to stabilize, warning of the impact of flooding on prices.
The governor of the BdM, Rogério Zandamela, explained: “This decision is supported by the prospects of maintaining single-digit inflation in the medium term, despite the materialization of some risks and uncertainties, notably the floods in several provinces of the country and the intensification of trade and geopolitical tensions.”
Since the beginning of January, Mozambique has been affected by floods that have mainly hit the provinces of Sofala, Zambézia, and Tete. More than 720,000 people have been affected, over 20 have died, populations have been besieged, roads have been blocked for weeks, and provisional losses are estimated at around €600 million.
Rogério Zandamela added: “In view of the worsening of these risks and uncertainties, the CPMO considers that the end of the MIMO rate reduction cycle that began in January 2024 is approaching.” Annual inflation stood at 3.23% in December 2025, after 4.4% in November, thus remaining in single digits in the medium term.
Source: Lusa
