Maputo — The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Wednesday, decided to keep its key interest rate, the MIMO rate, at 17.25 per cent.

A brief CPMO statement said this decision was based "on the prevalence of high adverse risks and uncertainties, associated above all with the pressure on public expenditure, as well as the extension and intensification of the conflict between Russia and Ukraine'.

The CPMO thus decided not to raise interest rates, despite the prospect that inflation will remain in single digits (less than 10 per cent) in the medium term.

The statement noted that by June 2023, the annual rate of inflation had fallen to 6.8 per cent. Underlying inflation, which excludes fruit and vegetables, and prices determined by the government, had also fallen.

"The evolution of inflation in the medium term reflects, above all, the stability of the metical, and the impact of the measures taken by the CPMO', the statement added.

The risks and uncertainties, the CPMO said, included the evolution of administered prices, particularly of liquid fuels. In the external environment, the main uncertainty concerned the scale of the impacts of the Russian invasion of Ukraine.

The CPMO also warned that domestic public indebtedness has worsened, and now stands at 308.4 billion meticais (about 4.8 billion dollars, at the current exchange rate). This was an increase of 33.3 billion meticais on the figure from December 2022.

The CPMO, the statement concluded, "will continue to monitor the evolution of the risks and uncertainties associated with the projections of inflation, and will not hesitate to take necessary corrective measures'.