Mozambique cuts key rate for fourth straight time after IMF advice

AFRICAN BUSINESS AND ECONOMYAugust 1, 2024 at 7:15 AM UTC

TLDR

Mozambique's central bank cuts main interest rate for the fourth consecutive meeting, signaling more rate cuts ahead.
Inflation rate in Mozambique slightly decreases to 3.04% year-on-year in June.
Bank of Mozambique projects inflation to remain in single digits, planning to continue reducing the MIMO rate.

Mozambique's central bank cut its main interest rate for the fourth consecutive monetary policy meeting on Wednesday, citing a favorable inflation outlook and indicating that more rate cuts are likely to follow.

The bank reduced its MIMO interest rate to 14.25% from 15.00%, marking its fourth consecutive 75-basis-point reduction. The country's inflation rate slightly decreased to 3.04% year-on-year in June, down from 3.07% in May, according to data from the statistics agency.

Bank of Mozambique Governor Rogério Zandamela told reporters that inflation is projected to remain in single digits over the medium term, and the central bank expects to continue reducing the MIMO rate.

Key Takeaways

The move makes Mozambique's central bank an outlier among African central banks, as only five others have lowered rates this year, with the majority either raising rates or maintaining them due to inflation concerns. The interest rate cut is expected to support Mozambique's economic growth, which slowed to an annual 3.2% in the first quarter from 4.8% in the previous three months. The IMF indicated earlier this month that further policy rate cuts were warranted in Mozambique.

Mozambique

Economy

Interest Rate

Inflation

Central Bank