Maputo — The Monetary Policy Committee of the Bank of Mozambique (CPMO), at a meeting in Maputo on Wednesday decided to cut its benchmark interest rate by 75 base points.

Thus, the MIMO rate fell from 13.5 to 12.75 per cent. A CPMO statement said this decision "is sustained by the continued consolidation of the prospects of single digit inflation over the médium term, despite the uncertaintes about the duration of the post-election tensions and their impact on the prices of goods and services'.

In October, said the CPMO, the annual rate of inflation was 2.7 per cent, a slight rise from the 2.5 per cent recorded in September. Underlying inflation, which excludes fruit and vegetables and goods where the government fixes the price, remained stable.

The prospects for single digit inflation, the statement added, essentially reflect the stability of the metical and the impact of the measures taken by the CPMO.

The CPMO expected moderate economic growth in the médium term. In the third quarter of 2024 economic growth, excluding liquefied natural gas (LNG), was 2,8 per cent, a decline from the 3.6 per cent of the previous quarter. When LNG is included, growth was 3.7 per cent, after 4.5 per cent in the previous quarter.

"Despite the prevalence of uncertainties about the impacts of the post-election tension, and of climate shocks, it is envisaged that, over the medium term, there will be moderate growth in economic activity', the CPMO predicted.

Pressure on domestic public indebtedness remains high. The domestic debt now stood at 408.1 billion meticais (about 6.4 billion US dollars), which was an increase of 95,7 billion meticais when compared with the figure of December 2023.

The country's international reserves remained "at comfortable levels', the CPMO said, and are enough to cover about five months of imports of goods and services.