Mozambique central bank reduces interest rates – AIM report

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Mozambique central bank reduces interest rates – AIM report

7:50 CAT | 01 Aug 2025

Image: Banco de Moçambique

The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Thursday, reduced the bank’s benchmark interest rate, the MIMO rate, by 75 base points, from 11 per cent to 10.25 per cent.

A CPMO statement said this decision “arises essentially from the continued consolidation of prospects of single digit inflation over the medium term, reflecting in part the favourable trend of international prices for merchandise, despite the high risks and uncertainties associated with the projections domestically”.

The CPMO said that the annual rate of inflation had risen slightly, from fallen from four per cent in May, to 4.2 per cent in June. Underlying inflation, which excludes fruit and vegetable, and goods with administered prices, also rose slightly.

The CPMO was confident that the prospects for single digit inflation in the medium term remain valid, reflecting the stability of the metical, and the international trend for a reduction in the prices of goods and services.

The CPMO forecast moderate economic growth in the medium term, excluding the production and export of liquefied natural gas (LNG).

The pressure on domestic public indebtedness had continued to grow reaching 454.3 billion meticais (about 71 billion US dollars, at the current exchange rate), which was an increase of 38.7 billion meticais compared with December 2024.

The risks and uncertainties associated with the projections of inflation remain high, the CPMO warned. Factors that could increase inflation in the medium term include a worsening fiscal situation in a context of growing challenges to mobilise financial resources for the state budget, and the effects of climate shocks.

The CPMO promised that it will continue to “normalise” the MIMO interest rate in the medium term. But further reductions in interest rates will depend on the prospects for inflation.

Source: AIM