Mozambique cuts rate to record low to aid recession economy

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Mozambique cuts rate to record low to aid recession economy

2:11 CAT | 30 Sep 2025

File photo: Lusa

Mozambique’s central bank cut its benchmark interest rate to a record low to support an economy that’s in a recession and signaled that it would continue to ease.

The Banco de Moçambique lowered the rate, known by its Portuguese acronym Mimo, to 9.75% from 10.25%, Governor Rogério Zandamela said Monday. The central bank will keep moderating the key rate, but the pace and scope of the easing will be determined by inflation data, he said.

The central bank expects annual inflation to remain in single digits in the medium term after accelerating to 4.8% last month — the highest since November 2023.

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The economy, which has shrunk for three consecutive quarters, is expected to get a boost from a long-anticipated restart of large natural gas export projects in the northeast of the nation, the International Monetary Fund said earlier this month.

The LNG projects, set to cost more than $50 billion, have faced years of delays due to attacks from Islamic State-linked militants.

A “brutal” easing cycle is also helping the economy recover, said Zandamela. The central bank has cut interest rates by 750 basis points since January 2024.

Zandamela has faced repeated questions from Mozambique’s main business lobby group about an ongoing shortage of foreign currency, complaints that he’s brushed off.

The IMF in August called for greater exchange rate flexibility to relieve foreign currency pressures. But any depreciation in the metical that’s been stable against the dollar since mid-2021 would add to price pressures.

Source: Bloomberg