Mozambique central bank leaves key rate unchanged at 9.25% — Watch

The Bank of Mozambique today kept its benchmark interest rate unchanged at 9.25%, citing reduced liquidity in local currency and forecasting an increase in inflation in the short term, before it falls to single digits over the medium term. “This decision is supported by the reduction in local currency liquidity in the banking system, resulting from the increase in the mandatory reserve ratio last May, despite the continued presence of high risks and uncertainties associated with inflation projections,” said Bank of Mozambique governor Rogério Zandamela, whose term ends in September. The position was announced at the end of a meeting of the Monetary Policy Committee (CPMO), held in Maputo every two months, which decided to keep the rate unchanged, as it had already done in March, following 12 consecutive cuts over 24 months since January 2024, and again at the end of May.

In addition, in May the CPMO decided to increase the mandatory reserve ratio for local currency liabilities from 29% to 39% of total deposits that commercial banks are required to hold at the central bank, “with the aim of absorbing excess liquidity in the banking system, which could generate greater inflationary pressure”. However, the committee decided to maintain the mandatory reserve ratio for foreign currency liabilities at 29.5%. Both ratios remained unchanged after today’s CPMO meeting.

In the outlook released following the meeting, Zandamela pointed to “an increase in inflation in the short term and a reduction in inflation to single digits over the medium term”, recalling that annual inflation stood at 7.5% in June 2026, after 7.2% in May. “In the short term, prices are expected to continue rising, reflecting the indirect effects of higher domestic liquid fuel prices and imported inflation. However, over the medium term, inflation is expected to fall to single digits, explained, among other factors, by expectations of continued exchange rate stability and a slowdown in energy and food prices,” Zandamela said today.

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He stressed that “the risks and uncertainties associated with inflation projections remain high”, highlighting, at domestic level, “the scale of the indirect effects of higher fuel prices”, as well as “the pace of recovery in productive capacity following the floods that affected the country in the first quarter of the year”. “Third, the impact of worsening fiscal risks, particularly the increase in debt levels and arrears in payments owed by the State. Fourth and lastly, the effects of climate shocks that affect the country every year.

Externally, uncertainties remain regarding the duration and magnitude of the effects of the geopolitical conflict in the Middle East, particularly on logistics chains, the supply of goods, and energy and food prices,” he said. Mozambique’s MIMO monetary policy rate had been set at 17.25% since September 2022, following intervention by the central bank, which then began a cycle of consecutive cuts on 31 January 2024, reducing the rate to 16.5%. In March last year, the Bank of Mozambique decided to lower the rate to 15.75%, with cuts continuing at every subsequent meeting until it reached 9.75% in September, 9.50% in November and, in January, 9.25%, before suspending the easing cycle in March and keeping the rate unchanged in May.

The central bank added that this CPMO session was preceded by a meeting of the Bank of Mozambique’s Financial Stability and Inclusion Committee, which “assessed systemic risks, key vulnerabilities and the evolution of financial inclusion indicators”, concluding that “the national financial system remains stable and resilient and that levels of financial inclusion continue to improve”. The next CPMO meeting is scheduled for 30 September, it was announced, after the end of Rogério Zandamela’s second and final term as governor, following ten years in office.

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