London, Nov. 28, 2024 (Lusa) - Oxford Economics predicts that inflation in Mozambique will rise from 3.1% this year to 4.9% in 2025, based on the gradual devaluation of the metical and increased pressure on food prices.

"We forecast that the average inflation rate will rise from 3.1% this year to 4.9% in 2025, based on our assumption that the central bank will gradually devalue the metical next year and that upward pressure on food prices will continue into 2025," write the Oxford Economics analysts.

In a commentary on the cut in the benchmark interest rate by the Mozambican central bank, announced this week, the African department of Oxford Economics points out that "the Bank of Mozambique should lower the MIMO rate by a further 50 basis points in the first half of next year, and should maintain the rate for the rest of the year due to growing inflationary pressures".

The Monetary Policy Committee (CPMO) of the Bank of Mozambique announced on Wednesday a further cut in the monetary policy interest rate, known as MIMO, from 13.5%, in force since the end of September, to 12.75%.

"This decision is underpinned by the continued consolidation of the outlook for inflation in single digits in the medium term, despite the uncertainties regarding the duration of the post-election tension and its impact on the prices of goods and services," the Bank of Mozambique said in a statement after the CPMO 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 16.5%. On 27 March it cut it to 15.75%, on 27 May to 15%, on 31 July to 14.25% and on 30 September to 13.5%.

The Committee's next meeting is scheduled for 27 January.

MBA/AYLS // AYLS

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