Mozambique’s central bank has cut its benchmark interest rate by 75 basis points to 10.25%, marking the tenth consecutive rate cut since January 2024. The Bank of Mozambique said on Thursday that it expects inflation to stay within single digits over the medium term, Reuters reported.
The MIMO lending rate (MZMIMO=ECI) has been lowered in every policy meeting this year, as the central bank continues its easing cycle. The last rate cut, also 75 basis points, was made in May. In its latest statement, the bank acknowledged existing debt pressures but noted that favorable international commodity prices have supported the country’s inflation outlook.
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Annual inflation in Mozambique, a resource-rich Southern African country, rose slightly to 4.15% in June from 4.00% in May (MZCPIY=ECI).
Despite the stable economic indicators, political uncertainty remains a risk. The country is still grappling with the fallout from a disputed election last year. The long-ruling Frelimo party has been accused by the opposition and Western observers of rigging the vote, which Frelimo denies.
In the aftermath of the election, over 300 people were killed, many in clashes with security forces. The government is now seeking to prosecute opposition leader Venancio Mondlane for allegedly inciting civil unrest.
Image Credit: CNBC Africa
