Mozambique: Standard Bank expects inflation of 11.7% this year

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Mozambique: Standard Bank expects inflation of 11.7% this year

3:02 CAT | 06 Sep 2022

File photo: Lusa

Standard Bank forecasts that Mozambique will end the year with inflation of 11.7%, with the pace of price rises slowing in the coming months.

The peak may have already been reached in August, said the bank’s chief economist, Fáusio Mussá.

He highlighted the impact of measures announced by the government to subsidise transport and fuel imports to ensure a certain stability in prices.

“The most vulnerable sections of our society are the most affected by the impact of the rise in fuel prices,” he said.

“In this scenario, we expect that the Bank of Mozambique will maintain the monetary policy reference interest rate (MIMO) until the end of the year at the current level of 15.25%,” he added.

Fáusio Mussá said he was concerned about the fall in international reserves, leading to a reduction in import cover to 4.7 months.

“In view of the increased foreign aid (from the World Bank, International Monetary Fund and other partners), the government can be expected to restore the level of reserves to more than four months of imports in the coming months,” he added.

“This may help reduce some of the pressures on the foreign exchange market from a liquidity perspective,” Mussá said.

Source: Lusa