Africa-Press – Mozambique. The consultancy Oxford Economics Africa suggested on Tuesday that Mozambique’s central bank may further increase the reference interest rate, to 17.75%, at its November meeting, in response to the rise in inflation.
“We expect inflation to continue to rise, to 12.4% in the fourth quarter of this year compared to the same period last year, which could possibly trigger a further hike in the monetary policy interest rate (MIMO rate) of 50 basis points at the next meeting on monetary policy on November 30th,” the analysts write.
In a bulletin on Mozambique sent to investors, Oxford Economics Africa says that “the most recent decision of the monetary policy committee suggests that they [the Bank of Mozambique] expect inflation to remain in double digits for the coming months”, in line with the consultant’s forecast of an increase in prices above 12% this year.
On Friday, the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to increase the MIMO rate by two percentage points, from 15.25% to 17.25%, on the basis of inflation and the international context.
“The measure aims to ensure the return of inflation to single digits, in the medium term,” regulator said, adding: “It is expected that the price volatility of energy and food products will continue at international level, given the extension of the conflict between Russia and Ukraine, with the potential to trigger a spiral of sustained domestic price increases”.
Mozambican international reserves have “fallen consistently, from US$3.56 billion in July 2021 to US$2.83 billion in July this year, with the central bank intervening in the foreign exchange market to stabilise the metical exchange rate at 63.83 per dollar” the analysts note, warning that “a continued drop in real interest rates could lead to capital outflows, which would put further pressure on international reserves and undermine the central bank’s ability to maintain the exchange rate”.
Year-on-year inflation in Mozambique stood at 12.1% in August, its highest value in the last four years and 11 months, according to National Statistics Institute (INE) figures.
For More News And Analysis About Mozambique Follow Africa-Press
