Mozambique Keeps Interest Rate at Record Low on Stable Inflation

MAPUTO (Capital Markets in Africa) – Mozambique’s central bank kept its key rate at a record low, saying that while it estimates inflation will accelerate slightly, it won’t compromise the regulator’s objective of maintaining macroeconomic stability.

The Monetary Policy Committee held the benchmark interbank rate, known by its Portuguese acronym MIMO and introduced in April 2017, at 14.25 percent, Banco de Mocambique said Thursday in an emailed statement. It retained the policy rate at 17.25 percent.

The country’s annual inflation rate fell to 3.4 percent in March compared with 3.7 percent in February. Economic activity continues to be “modest” in light of uncertainties around the magnitude of natural disasters such as Cyclone Idai, the bank said.

The storm killed more than 1,000 people in Mozambique, Malawi and Zimbabwe. Tropical Cyclone Kenneth is currently swirling toward Mozambique’s coast, where Anadarko Petroleum Corp. has halted all flights to and from its liquefied natural gas site.

Given Idai’s impact, economic growth may slow, with a recovery expected in 2020, although this will be below the nation’s maximum productive capacity, the bank said. Gross domestic product expanded 3.3 percent in 2018 from a year earlier, the statistics agency said in February.