Mozambique becomes first in Africa to cut rates third time in row

Daba Finance/Mozambique central bank cuts key rate for third meeting in a row

BREAKING NEWSMay 30, 2024 at 11:13 AM UTC

TLDR

Mozambique's central bank cuts interest rates for the third time this year, reducing MIMO rate by 75 basis points to 15.00%.
Monetary Policy Committee emphasizes favorable forecasts and aims to keep inflation in single digits in the medium term.
Despite slight inflation increase to 3.26% year-on-year in April, focus remains on supporting economic stability and growth through monetary policies.

Mozambique's central bank became the first in Africa to cut interest rates for a third consecutive time this year, signaling its commitment to continued easing measures. The MIMO interest rate was reduced by 75 basis points to 15.00%.

The Monetary Policy Committee cited favorable forecasts as the basis for its decision, aiming to maintain inflation in single digits in the medium term.

Despite a slight increase in inflation to 3.26% year-on-year in April, significantly lower than its post-pandemic peak of 13% in 2022, the bank remains focused on supporting economic stability and growth through its monetary policy actions.

Key Takeaways

Mozambique's decision to lower interest rates sets it apart from other African central banks, as most have either maintained or raised rates this year due to concerns about inflationary pressures. The move was supported by expectations of continued single-digit inflation in the medium term, thanks to stability in the metical currency and less severe effects of geopolitical tensions on international prices. Despite the rate cut, Mozambique's overall monetary policy stance remains relatively tight due to high reserve requirements, as noted by the International Monetary Fund. The decision reflects a delicate balancing act aimed at supporting economic growth while ensuring price stability and financial resilience.

Mozambique

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Inflation

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