Africa-Press – Mozambique. The consultancy Fitch Solutions expects the Bank of Mozambique to keep its benchmark interest rate at 17.25% next year, based on the economic growth of 6.5% and appreciation of the metical by 3.1%.
According to the latest analysis of Mozambique’s economic and monetary policy, this consultancy, owned by the same owners of the financial rating agency Fitch Ratings estimates that the Mozambican central bank will maintain the benchmark interest rate, known as MIMO.
“We anticipate that the slowdown in price growth will limit the central bank’s impetus to raise the rate and that strong economic growth will discourage a rate cut,” the analysts wrote in the commentary sent to investors, to which Lusa had access.
In the report, Fitch Solutions also writes that the metical should continue to trade in the same band of 63 to 64 meticais per dollar in the coming weeks, ending at 63.70 meticais per dollar at the end of the year.
“We anticipate that the monetary policy committee will maintain the 17.25% rate at the 30 November meeting, after raising the rate by 400 basis points this year to 17.25%,” the analysts wrote, noting that this was the highest rate since March 2018.
Underpinning Fitch Solutions’ forecast is the slowdown in inflation for the second consecutive time this year, to 11.8%, after reaching 12.1% in August, and is expected to end the year at 10.2%.
“In 2023, we see the Bank of Mozambique keeping the interest rate at 17.25% due to the slowdown in inflation and the acceleration of Gross Domestic Product growth,” the analysts stressed.
The metical, the analysts wrote, is expected to appreciate 3.1% in 2023, to an average of 61.85 meticais per dollar, “based on improved macroeconomic fundamentals and rising revenues from gas exports”.
As for economic growth, Fitch Solutions expects Mozambique to record an expansion of 5.3% this year and 6.5% next year, above the five-year pre-pandemic average, when growth was 4%.
“This is due to the low base effect and increased investment and production in the liquefied natural gas sector in the north of the country,” the report concluded.
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