The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to reduce the monetary policy interest rate, the MIMO rate, from 9.75% to 9.50%. This modest reduction reflects the worsening risks and uncertainties associated with inflation projections, especially the delay in the payment of domestic public debt instruments by the state.

The outlook for inflation remains in the single digits in the medium term. In October 2025, annual inflation stood at 4.8%, after 4.9% in September. Underlying inflation, which excludes fruit and vegetables and goods with administered prices, also fell. The maintenance of a single-digit inflation outlook in the medium term essentially reflects the stability of the Metical and the favorable trend in international commodity prices.

Domestic public debt continues to worsen, with an impact on the normal functioning of the financial market. Domestic public debt, excluding loan and lease contracts and overdue liabilities, stands at 465.8 billion meticais, which represents an increase of 50.3 billion compared to December 2024. The delay in the payment of domestic public debt instruments by the state is resulting in a reduction in the appetite for public securities and rigidity in interbank money market interest rates.

The risks and uncertainties associated with inflation projections remain high. In the medium term, in addition to the risks and uncertainties associated with the effects of climate shocks and the slowness in restoring productive capacity and the supply of goods and services in the economy, the delay in the payment of domestic public debt instruments by the state stands out.

The CPMO reaffirms its commitment to pursuing a prudent monetary policy geared towards macroeconomic stability. In view of the worsening risks and uncertainties, the direction of monetary policy will henceforth be conditional on the assessment of the risks and uncertainties underlying inflation projections.