Maputo, Sept. 30, 2024 (Lusa) - The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided on Monday to lower the monetary policy interest rate, known as MIMO, from 14.25%, in force since July, to 13.50%, the institution announced.
"This decision is underpinned by the continued consolidation of the outlook for inflation in single digits in the medium term, in a context in which the assessment of the risks and uncertainties associated with inflation projections remains favourable," the Bank of Mozambique said in a statement after the Committee's meeting, which is held every two months.
The key interest 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, when it was reduced to 16.50%. On 27 March it cut it to 15.75%, on 27 May to 15.00% and on 31 July to 14.25%.
The Committee's next meeting is scheduled for 27 November.
In the same statement, the central bank explains that "the inflation outlook remains at one digit in the medium term", which "essentially reflects the stability of the country's currency, the metical and the impact of the measures taken by the CPMO".
For the medium term, the central bank expects "moderate economic growth", despite "the prevalence of uncertainties regarding the impacts of climate shocks on agricultural production and various infrastructures".
The governor of the central bank, Rogério Lucas Zandamela, had already agreed to adjust the monetary policy adopted last year, given the containment of price rises, according to a letter to the International Monetary Fund (IMF).
"With inflation now back in the centre of the target range, the Bank of Mozambique will carefully monitor the need to adjust monetary policy in order to continue fulfilling its price stability mandate," reads the letter, previously published by Lusa.
In the letter, dated 19 December 2023 and which was part of the third evaluation and approval of the Extended Credit Facility (ECF) programme for Mozambique, concluded that month by the IMF, the governor of the central bank recalled that in March 2022, when inflation "was still below target", the institution reacted to an "expected increase" in prices and to the "economic boost following the lifting of Covid-19-related restrictions".
This reaction involved raising the key rate (MIMO) by 200 basis points, from 13.25% to 15.25%, followed in September 2022 by a further increase in the same proportion, which lasted until January.
"In doing so, the Bank of Mozambique's policy was aimed at proactively preventing risks" to inflation expectations in the short term, "while at the same time avoiding jeopardising the recovery of demand".
PVJ/AYLS // AYLS
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