Mozambique Leaves Rates on Hold in January

At its January 13th, 2014 meeting, Bank of Mozambique decided to leave the benchmark interest rate on hold at 8.25 percent. In 2013, the Bank cut the interest rate by 125 bps.

The Monetary Policy Committee noticed that in 2013 the leading macroeconomic indicators reached the targets initially set: the inflation rate slowed, international foreign reserves improved and monetary base growth rate remained under control. 

In December of 2013, Mozambique’s annual inflation rate slowed to 3.54 percent, the lowest rate in eleven months and below government target of 5.6 percent. For 2014, the government targets 6.4 percent.

The economy advanced 8.1 percent yoy in the third quarter of 2013, according to data released by INE. Although the GDP slowed from the previous quarter (8.4 percent) it rose at a faster rate than in the same quarter a year earlier (7.1 percent), boosted by the services sector, mainly the transport and communications (18.4 percent yoy) sector. For 2014, the government targets a GDP growth rate of 8 percent.

Preliminary estimates show that the current account deficit narrowed 15.2 percent yoy in the third quarter of 2013, mainly due to a 75.4 percent rise in current transfers. 

The Bank of Mozambique decided to intervene in the interbank markets in order to ensure that the stock of base money does not surpass 45892 million Meticais in January of 2014. It also decided to maintain the Standing Lending Facility interest rate at 8.25 percent; maintain the Standing Deposit Facility interest rate at 1.5 percent, and the Reserve Requirements Ratio unchanged at 8.0 percent.

Joana Taborda |
1/16/2014 2:00:26 PM