- Bank of Mozambique predicts negative economic growth in the first quarter of 2025
- Interest rate reduced by 0.5%
By Aurélio Muianga
Maputo (MOZTIMES) – The annual inflation rate in Mozambique increased from 2.84% in November to 4.15% in December 2024, fuelled by the post-election crisis that disrupted the supply of essential goods and triggered a surge in prices, according to the Governor of the Bank of Mozambique (BdM), Rogério Zandamela, during a press conference on Monday in Maputo.
Despite the increase, the Bank of Mozambique maintains its forecast for single-digit inflation in the medium term. According to Zandamela, this reflects the stability of the Metical and the impact of measures adopted by the central bank’s Monetary Policy Committee (CPMO).
The post-election crisis is also expected to impact economic growth in 2025. "In the worst-case scenario, there could be zero or even negative growth in the first quarter of 2025," Zandamela warned.
The Central Bank forecasts modest growth starting in the second quarter, driven by factors such as the economy's ability to recover productive capacity, improvements in the supply of goods and services, fiscal adjustments, and the restoration of business confidence, which remains shaken.
Despite rising inflation, the CPMO decided to reduce the monetary policy interest rate, known in Portuguese as the MIMO rate, by 50 base points, from 12.75% to 12.25%. "This decision stems from maintaining inflation projections at single-digit levels in the medium term, despite increased risks and uncertainties, particularly those related to the post-election tension, fiscal risk, and climate shocks," explained the Governor.
The Committee also decided to lower the required reserve ratios, reducing the rate from 39% to 29% for reserves in domestic currency and from 39.50% to 29.50% for reserves in foreign currency. This measure aims to inject more liquidity to support the recovery of productive capacity and improve the supply of goods and services in the country, according to the Central Bank. (AM)
