MAPUTO, Jan 29 – Mozambique’s central bank cut its benchmark policy rate by 25 basis points to 9.25%, extending its longest easing run while signalling that room for further reductions is limited. The decision marked the 13th consecutive cut and followed a similar 25 basis point move in November.
However, Governor Rogério Zandamela said risks to the outlook have risen after severe floods in recent weeks. The government estimates the flooding caused about $644 million in damage to infrastructure also citing trade and geopolitical tensions as uncertainties that could lift prices and disrupt activity.
Inflation has eased for now as annual consumer inflation slowed to 3.23% in December from 4.38% in November, the lowest level in 13 months, according to data referenced by the bank. Still, analysts expect price pressures to build later this year as financing needs and investment activity pick up.
Oxford Economics said inflation could rise as the government relies partly on monetary financing of the budget deficit, as construction resumes on large liquefied natural gas projects.
Meanwhile, Mozambique is negotiating with the International Monetary Fund on a new lending programme, which could help anchor policy and unlock additional support. Once an IMF deal is in place, President Daniel Chapo has said the government could seek to restructure its debt, signalling that public finances remain under strain.
The central bank did not give a timetable for ending its rate cutting cycle. Instead, it said the balance of risks has shifted and it will track inflation, the exchange rate, and flood related supply disruptions before deciding on further action. For now, the bank said policy will stay cautious and data-driven.
