Mozambican business leaders are calling for an injection of foreign currency into the national economy as a measure to accompany the announced reduction in the interest rate, easing exchange rate pressures, according to a statement from the business confederation reviewed on Saturday, 31 January, by Lusa.
To maximize the positive effects of monetary policy on the real economy, the Confederation of Economic Associations of Mozambique (CTA) argues that the reduction of the MIMO policy rate should be accompanied by more active interventions in the Interbank Foreign Exchange Market, particularly through increased foreign currency injection to relieve exchange rate pressure, the business statement reads.
Last Wednesday (28), the Bank of Mozambique (BdM) cut the MIMO monetary policy rate for the 12th consecutive time by 0.25 percentage points, bringing it to 9.25%, forecasting stabilization, while warning about the effect of floods on prices.
Business leaders believe that, in light of the MIMO rate reduction, foreign currency injection will also help lower import costs and create a more stable environment for corporate planning. “The combination of these measures would significantly strengthen the impact of monetary policy on the productive sector,” the CTA noted, while acknowledging the challenges of the current socio-economic context—recently worsened by the impact of floods in the south of the country—and welcoming the central bank’s action.
The business organization emphasizes that the reduction of the MIMO rate creates room to lower bank credit costs, potentially benefiting companies through lower interest rates on investment financing, strengthening working capital, and providing greater predictability in financial management—crucial factors in an economic recovery context. “The CTA positively welcomes this decision, as it constitutes a favorable signal for the gradual improvement of financing conditions in the economy,” the statement adds.
Mozambique’s key interest rate had been fixed at 17.25% since September 2022, following central bank intervention, which then began consecutive cuts starting 31 January 2024, when it was reduced to 16.5%.
In March last year, BdM cut the rate to 15.75%, with subsequent reductions at each following meeting, reaching 9.75% in September, 9.50% in November, and now 9.25%.
“However, given the worsening of these risks and uncertainties, the CPMO considers that the MIMO rate cut cycle initiated in January 2024 is approaching its end,” said BdM Governor Rogério Zandamela during the announcement of the reduction, noting that the initial projection had foreseen the downward trajectory lasting up to 36 months.
“The inflation outlook remains in single digits in the medium term. In December 2025, annual inflation stood at 3.2%, after 4.4% in November. We consider this inflation outcome a success, at a reasonable and low level for our economy. It is something we are proud of,” he pointed out.
Mozambique’s Monetary Policy Committee (CPMO) meets every two months, with the next meeting scheduled for 30 March 2026.
Source: Diário Económico
