The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided today to maintain the monetary policy interest rate, known as MIMO, at 17.25 per cent, the institution announced in a statement.
“This decision is underpinned by the worsening risks and uncertainties associated with inflation projections, despite the prospects of maintaining it in single digits in the medium term,” reads the statement from the Bank of Mozambique.
In August, the document says, annual inflation fell to 4.9%, after 5.7% in July, a reduction explained mainly by the fall in food prices, favoured by the extension of the fresh season, in a context of stability of the metical.
“Underlying inflation increased, mainly due to higher prices in the catering and clothing and footwear sectors,” the statement reads.
The central bank recognised that the “risks and uncertainties” underlying inflation projections have worsened.
“Domestically, pressure on public spending and uncertainties regarding the evolution and effects of extreme weather events are expected to prevail. In the external environment, uncertainties about the magnitude of the impact of the prolongation and escalation of the conflict between Russia and Ukraine stand out, as well as the recent trend towards higher fuel prices,” noted the Mozambican central bank.
The regulator also indicated that domestic public indebtedness, excluding loan and lease contracts and overdue liabilities, stands at 321.1 billion meticais (4,717 million euros), which represents an increase of 46 billion (675 million euros) compared to December 2022.
“The CPMO will continue to monitor the evolution of the risks and uncertainties associated with the inflation projections, and will not hesitate to take the necessary corrective measures,” concludes the CPMO, which meets again on 22 November.