The Monetary Policy Committee (CPMO) of the Bank of Mozambique announced on November 27 a reduction in the monetary policy interest rate, known as the MIMO rate, from 13.5% to 12.75%. This marks the latest adjustment in a series of cuts aimed at stabilizing inflation and promoting economic activity.
In its statement following the bi-monthly CPMO meeting, the Bank of Mozambique justified the decision by citing “the continued consolidation of single-digit inflation prospects in the medium term, despite uncertainties related to post-election tensions and their impact on prices of goods and services.”
The central bank has been progressively reducing the basic interest rate, which was initially set at 17.25% in September 2022. A series of subsequent cuts began on January 31, 2023, bringing the rate down to 16.5%. Additional reductions followed: 15.75% in March, 15% in May, 14.25% in July, and 13.5% in September. The latest decrease to 12.75% reflects the bank’s commitment to maintaining inflation control while fostering economic growth. The next CPMO meeting is scheduled for January 27, 2024.
The Bank of Mozambique emphasized that “inflation prospects remain at single digits in the medium term,” attributing this stability to the steady performance of the metical and the measures implemented by the CPMO. However, the statement also highlighted the challenges of “moderate economic growth” in the current environment.
According to recent data, Mozambique’s GDP (excluding liquefied natural gas, LNG) grew by 2.8% in the third quarter of 2024, down from 3.6% in the previous quarter. Including LNG, GDP growth was slightly higher, at 3.7%, compared to 4.5% in the preceding quarter. The central bank noted that “economic activity is expected to remain modest until the end of 2024.”
The bank also acknowledged ongoing uncertainties stemming from post-election tensions and the impact of climate-related shocks on agriculture and infrastructure. Despite these challenges, it expressed cautious optimism for moderate economic growth in the medium term, supported by its monetary policy measures.