Mozambique central bank cuts key rate to 9.75% – Watch

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Mozambique central bank cuts key rate to 9.75% – Watch

5:08 CAT | 29 Sep 2025

Screengrab: Banco de Moçambique'

The Monetary Policy Committee (CPMO) of the Bank of Mozambique today reduced the MIMO monetary policy interest rate for the tenth successive time — by 0.50 percentage points — to 9.75%, Governor Rogério Zandamela announced.

“This measure is essentially a result of maintaining single‑digit inflation prospects in the medium term, partly reflecting exchange rate stability and a favourable trend in international commodity prices, despite high risks and uncertainties domestically,” the governor said at a press conference in Maputo at the close of the CPMO meeting, which convenes every two months.

Mozambique’s key rate had stood at 17.25% since September 2022, following central bank intervention, before beginning a series of cuts starting on 31 January 2024, when it fell to 16.50%.

In subsequent months, the bank cut the rate to 15.75% in March, 15.00% in May, 14.25% in July, 13.50% in September, 12.75% in November, 12.25% in January 2025, and 11.75% in March. This was followed by further reductions in May (to 11.00%), July (10.25%), and now to 9.75%.

“The CPMO will continue the process of normalising the minimum rate over the medium term — though at ever more modest levels. The pace and magnitude will depend on the inflation outlook and the assessment of risks and uncertainties embedded in medium-term projections,” Zandamela said.

The governor recalled that the “normalisation process” began in early 2024, with an envisaged timeframe of 24 to 36 months, benefiting households, businesses, and the State, resulting in a cumulative reduction of 700 basis points.

“It was a huge gain for the system,” he noted, while acknowledging that commercial bank lending rates also “dropped substantially” — by around 600 basis points over the same period — though not fully reflecting the central bank’s benchmark rate owing to differences in customer profiles.

Zandamela said that “in the medium term, a gradual recovery of economic activity is expected” in Mozambique, “partly driven by the prospects for implementing strategic projects.”

He also cautioned that “risks and uncertainties around inflation projections remain high” in Mozambique, highlighting key upward pressures: firstly, the deteriorating fiscal situation amid growing challenges in mobilising revenue for the State’s budget; secondly, the impact of climate shocks; and thirdly, the slow restoration of productive capacity and supply of goods and services.

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