MAPUTO, July 29 – The Bank of Mozambique has kept its benchmark MIMO policy rate unchanged at 9.25%, extending a pause in its monetary easing cycle as policymakers seek to contain inflation amid growing domestic and external risks.
The decision marks the third consecutive meeting at which the central bank has left interest rates unchanged, following an easing cycle that began in January 2024. The bank said tighter monetary conditions continue to support its efforts to keep inflation under control despite mounting economic uncertainties.
Mozambique’s annual inflation rate rose to 7.51% in June, up from 7.22% in May, extending an upward trend that began in April.
Speaking at a press conference, Bank of Mozambique Governor Rogério Zandamela said inflation risks remain elevated due to a combination of rising fuel prices, climate-related disruptions, the country’s growing debt burden and geopolitical tensions in the Middle East.
According to Zandamela, inflation risks remain high, driven by higher fuel prices, growing debt, climate-related shocks and the conflict in the Middle East.
The central bank expects inflationary pressures to remain elevated in the near term before gradually easing, projecting that inflation will return to single-digit levels over the medium term.
Beyond inflation, Mozambique continues to grapple with a heavy public debt burden. A recent debt sustainability analysis conducted by the World Bank and the International Monetary Fund (IMF) concluded that the country’s debt remains unsustainable, limiting fiscal flexibility and increasing financing challenges.
Mozambique’s debt difficulties can be traced back to the 2016 hidden-debt scandal, which severely undermined investor confidence, triggered a sovereign debt crisis and significantly reduced the country’s access to international financing.
The latest policy decision reflects the central bank’s cautious approach as it balances the need to support economic growth with the objective of maintaining price stability and safeguarding financial stability amid persistent global and domestic headwinds.
