Monetary Policy Rate Reduced to 11.75%
The Monetary Policy Committee (MPC) of the Banco de Moçambique has decided to reduce the policy rate, the MIMO rate, from 12.25% to 11.75%. This measure is mainly driven by the continued outlook for single-digit in ation over the medium term, despite the increasing uncertainties related to the e ects of the worsening scal risk.
Prospects of single-digit in ation remain in place over the medium term. In February 2025, annual in ation stood at 4.74%, following 4.69% in January. Core in ation, which excludes fruits and vegetables and administered prices, remained stable. Prospects of single-digit in ation remain in place over the medium term, mainly re ecting the stability of the Metical and the impact of measures taken by the MPC.
Moderate economic growth is expected in the medium term, excluding lique ed natural gas (LNG). In the fourth quarter of 2024, gross domestic product (GDP), excluding LNG, is estimated to have contracted by 3.1%, following a 2.8% in the previous quarter. Including LNG, GDP contracted by 4.9%, following a 3.7% growth in the previous quarter. In the medium term, economic activity, excluding LNG production, is expected to gradually recover, despite uncertainties regarding the impacts of climate shocks on agricultural production and various infrastructure, and the e ects of post-election tension on economic sectors.
Pressure on domestic public debt continues to worsen. Domestic public debt, excluding loan and lease agreements and overdue liabilities, stands at 447.2 billion meticais, accounting for a 31.7 billion increase compared to December 2024.
Money market interest rates continue to decrease. The reference lending interest rate, the Prime Rate, continues to decrease in line with monetary policy decisions. A similar trend is observed in the interest rates applied by banks to their customers. Meanwhile, credit to the economy increased by 5.7% from January 2024 to January 2025.
The risks and uncertainties associated with in ation projections have increased. Key factors that could contribute to rising in ation in the medium term include the impacts of worsening scal risk, in the context of increasing challenges to mobilize nancial resources for the State Budget, as well as the e ects of climate shocks and post-election tension on the prices of goods and services.
The MPC will continue the process of normalizing the MIMO policy rate over the medium term. The pace and magnitude will continue to depend on in ation outlooks, as well as the assessment of the risks and uncertainties underlying medium-term projections.
The next MPC meeting is scheduled for May 28, 2025.
Rogério Lucas Zandamela
Governor