The Monetary Policy Committee (CPMO) of the Bank of Mozambique (BdM) decided yesterday, Monday (30), to once again lower the monetary policy interest rate, known as MIMO, from 14.25%, in force since July, to 13.50%

According to the BdM, this reduction is the result of the "continued consolidation of the outlook for inflation in the single digits over the medium term, in a context where the assessment of the risks and uncertainties associated with the projections remains favorable".

Before taking this decision, the central bank assessed the evolution of financial inclusion indicators at a meeting of the Financial Stability and Inclusion Committee and concluded that levels of financial inclusion had increased significantly.

In a note, the BoM pointed out that the outlook for inflation remains in the single digits in the medium term, with annual inflation continuing to decelerate in August, standing at 2.8%, after 3% in July. He also noted that the same trend was observed in underlying inflation, which excludes fruit and vegetables and goods with administered prices.

"The maintenance of a single-digit inflation outlook in the medium term essentially reflects the stability of the metical and the impact of the measures taken by the CPMO," he concluded.

Meanwhile, the reduction in the MIMO rate, as is also the case with other money market interest rates, is contrasted by domestic public indebtedness, which remains high.

"Domestic public indebtedness, excluding loan and lease contracts and overdue liabilities, stands at 402.7 billion meticais, which represents an increase of 90.3 billion compared to December 2023," said the BdM.

(Photo DR)