Maputo, March 26, 2025 (Lusa) - The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided on Wednesday to further lower its MIMO monetary policy interest rate from 12.25%, the level that had been in force since January, to 11.75%, warning of the worsening fiscal risk.

"This measure stems essentially from the maintenance of a single-digit inflation outlook in the medium term, notwithstanding the increased uncertainties regarding the effects of the worsening fiscal risk," reads the final communiqué released after the CPMO meeting in Maputo, which takes place every two months.

The key lending rate had been set at 17.25% since September 2022, following the intervention of the central bank, which then began consecutive cuts from 31 January 2024, when it was reduced to 16.50%. 

On 27 March last year it was cut to 15.75%, on 27 May to 15.00%, on 31 July to 14.25%, on 30 September to 13.5%, on 27 November to 12.75% and on 27 January this year to 12.25%.

The next CPMO meeting is scheduled for 28 May.

The communiqué, which was read out by the central bank's governor, Rogério Zandamela, adds that the inflation outlook "remains in single digits in the medium term" and that this "essentially reflects the stability of the metical and the impact of the measures taken by the CPMO."

In addition, it notes, money market interest rates "continue to fall" - namely the prime rate, the benchmark interest rate for credit, "in line with monetary policy decisions.

"The same behaviour can be seen in the interest rates that banks charge their customers," the CPMO statement says. "For its part, credit to the economy increased by 5.7 per cent from January 2024 to January 2025."

The central bank also says it expects "moderate economic growth" in the short term, following the 4.9% contraction in gross domestic product in the fourth quarter of 2024, a period marked by strong post-election social unrest in the country.

PVJ/ARO // ARO.

Lusa