Mozambique’s central bank kept its benchmark interest rate unchanged for a second consecutive meeting on Monday, warning that rising global price pressures linked to the conflict involving Iran could drive inflation into double digits.
The Bank of Mozambique left its MIMO policy rate at 9.25 percent, maintaining its cautious stance amid heightened global uncertainty and domestic economic challenges.
Central bank governor Rogerio Zandamela said the decision reflected concerns over the duration of the conflict in the Middle East and its potential impact on global supply chains, fuel prices and food costs.
Annual inflation accelerated to 4.41 percent in April from 3.37 percent in March, according to official data.
Zandamela said inflation was expected to rise further in the short to medium term and could potentially reach double-digit levels depending on how long the conflict persists.
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The central bank paused its monetary easing cycle in March after a series of rate cuts that began in January 2024. Authorities said the worsening international environment, combined with Mozambique’s heavy debt burden, had increased risks to price stability.
Economists at Nedbank said in a report last week that they expected Mozambique’s central bank to keep rates unchanged through 2026, forecasting average inflation above 7 percent due to rising fuel and food prices.
Mozambique is also preparing for renewed discussions with the International Monetary Fund, with IMF staff expected in the country in June to continue negotiations on a new loan programme.
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The country’s debt difficulties date back to the 2016 hidden-debt scandal, which severely damaged investor confidence and restricted access to international financing. Delays to major natural gas projects, expected to boost exports and government revenues, have further strained public finances.
