Mozambique: Complaints about the TSU must be sent to the Framework Commission - deputy minister
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Mozambique’s central bank may well opt to raise its benchmark interest rate further, to 17.75 percent, at its November meeting, due to rising inflation, according to the Oxford Economics Africa consultancy.
“We expect inflation to continue to rise, to 12.4 percent in the fourth quarter of this year year year-on-year, which could possibly trigger a further increase in the monetary policy interest rate (MIMO rate) of 50 basis points at the next monetary policy meeting on November 30,” the analysts write in a recent note.
n a commentary on the latest rise in Mozambique’s benchmark interest rate, sent to investors and which Lusa has seen , Oxford Economics Africa notes that “the latest decision of the monetary policy committee suggests that they expect inflation to remain at double digits in the coming months” is line with the consultancy’s forecasts, which are for inflation of over 12 percent this year.
On Friday, the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to increase the MIMO rate by two percentage points, to 17.25 percent from 15.25 percent, citing inflationary pressures and the international context.
READ: Just in: Bank of Mozambique raises MIMO rate from 15.25% to 17.25% – Watch
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“The measure aims to ensure the return of inflation to single digits in the medium term,” the bank said in a statement. “The volatility of energy and food prices at international level is expected to continue, in light of the prolonged conflict between Russia and Ukraine, with the potential to trigger a spiral of sustained price rises domestically.”
The Oxford Economics Africa analysts note that Mozambique’s international reserves have “fallen consistently, from US$3.56 billion in July 2021 to US$2.83 billion in July this year, with the central bank intervening in the foreign exchange market to stabilise the metical exchange rate at 63.83 per dollar” and they warn that “a continued fall in real interest rates could lead to capital outflows, which would put further pressure on international reserves and undermine the central bank’s ability to maintain the exchange rate.”
Year-on-year inflation in Mozambique was 12.1 percent in August, the highest rate in four years and 11 months, the National Statistics Institute (INE) has said.
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