The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided on Friday to maintain the monetary policy interest rate, MIMO rate, at 13.25%, announced in a statement.

"The decision is based on maintaining the single-digit inflation outlook despite the prevalence of elevated risks and uncertainties, particularly those stemming from the impacts of covid-19," the document reads.

Additionally, the CPMO decided to "reduce the reserve requirement ratios for domestic currency liabilities from 11.50% to 10.50% and foreign currency liabilities from 34.50% to 11.50%, in order to make more liquidity available to the economy."

Annual inflation stood at 5.6% in August, after 5.5% in July, in a context of lower depreciation of the metical against the dollar, notes the central bank.

For the short and medium term, "inflation is expected to remain in single digits, despite the prospects of rising food and oil prices on the international market," he adds.

In the note, the CPMO mentions that the prospects for a gradual recovery of the economy in 2021 and 2022 are consolidated, "driven, above all, by external demand. 

Gross domestic product (GDP) grew 2% in the second quarter compared to the same period in 2020, "due to the recovery of most sectors of economic activity," it concludes.

Lusa Agency