The Monetary Policy Committee (CPMO) of the Bank of Mozambique announced this Wednesday, 27 November, a further cut in the monetary policy interest rate, known as MIMO, from 13.5%, in force since the end of September, to 12.75%, the Lusa news agency reported .
‘This decision is underpinned by the continued consolidation of the outlook for single-digit inflation in the medium term, despite uncertainties about the duration of the post-election tension and its impact on the prices of goods and services,’ the Bank of Mozambique said in a statement after the CPMO meeting, which is held every two months.
The key interest rate had been set at 17.25 percent since September 2022, after intervention by the central bank, which then began consecutive cuts from 31 January, when it was reduced to 16.5 percent. On 27 March it was cut to 15.75%, in May to 15%, July (14.25%) and on 30 September to 13.5%.
The next meeting of the Committee is scheduled for 27 January.
In the same statement, the central bank explains that ‘the outlook for inflation remains at one digit in the medium term’, which ‘essentially reflects the stability of the metical and the impact of the measures taken by the CPMO’.
It also expects ‘moderate economic growth’ in the medium term, recalling that in the third quarter of 2024, Gross Domestic Product (GDP) growth, excluding liquefied natural gas (LNG), stood at 2.8 per cent, after 3.6 per cent in the previous quarter.
‘And it is expected to remain modest until the end of 2024. When LNG is included, GDP grew by 3.7 per cent, after 4.5 per cent in the previous quarter. Despite the prevalence of uncertainties regarding the impacts of post-election tension, climate shocks on agricultural production and various infrastructures, economic activity is expected to grow moderately in the medium term,’ reads the statement.
It also noted that this session of the CPMO was preceded by a meeting of the Bank of Mozambique’s Financial Stability and Inclusion Committee, ‘which made an assessment of systemic risk and the main vulnerabilities,’ concluding ‘that the national financial system remains solid and resilient’.
The governor of the Bank of Mozambique, Rogério Zandamela, said at the beginning of the month that the post-election instability in the country does not alter the growth forecasts – 5.5 per cent according to the government in 2024 – which already incorporated this possibility, as long as it ‘dissipates in the short term’.
‘For the time being, based on what we know today, on how these risks are occurring and are materialising at the moment, the outlook for our economy is positive,’ said the governor, adding that ’that’s the message, because they were already incorporated (the post-election risks), in our vision, in our outlook. Today they’re just being realised. They’re not something new, so we have to adjust our forecasts,’ Zandamela added.
