Bank of Mozambique Leaves Policy Rate at 9.25%

The Bank of Mozambique held its MIMO policy rate unchanged at 9.25% at its September 2026 meeting, keeping borrowing costs at their lowest level since December 2015 for the fourth consecutive meeting. The decision mainly reflects persistent high risks and uncertainties over the impact of climate shocks and prolonged geopolitical tensions in the Middle East and Europe, which could affect international fuel and food prices. Policymakers noted that headline inflation moderated to 6.5% in August from 7.5% in July, and it is expected to rise in the short term due to imported inflation from major trading partners, as well as higher prices for fruit and vegetables. In the medium term, it is expected to decelerate and return to single-digit levels, amid the prospect of lower international fuel and food prices, alongside a potential easing of geopolitical tensions. Meanwhile, the outlook for moderate economic growth remains unchanged.

The Bank of Mozambique left its MIMO policy rate unchanged at 9.25% at its July 2026 meeting, maintaining borrowing costs at their lowest level since December 2015 for a third consecutive meeting. Headline inflation accelerated to 7.5% in June from 7.2% in May and is expected to remain elevated in the near term, reflecting higher global energy prices, before easing over the medium term. Meanwhile, economic activity is projected to moderate, with growth excluding natural gas estimated at 1.1% in the first quarter, down from 4.8% in the previous quarter, while output including natural gas is expected to contract 0.1%. Policymakers highlighted heightened uncertainty surrounding the duration of the Middle East conflict and its potential impact on supply chains, as well as international and domestic fuel and food prices. Future policy decisions will depend on evolving risks and uncertainties surrounding the inflation outlook.

The Bank of Mozambique left its key MIMO interest rate at 9.25% in May 2026, the lowest level since December 2015, marking the second consecutive hold. The decision reflects the prevalence of high uncertainty over the duration of the Middle East conflict and its potential impact on supply chains, as well as international and domestic fuel and food prices. The annual inflation rate in Mozambique accelerated for the third consecutive month, reaching a six-month high of 4.41% in April 2026. Inflation is expected to accelerate in the short to medium term, potentially reaching double digits, depending on how the conflict evolves. Meanwhile, the Committee decided to increase the reserve requirement ratio for liabilities in domestic currency from 29% to 39%, aiming to absorb excess liquidity in the banking system that could generate additional inflationary pressure. The reserve requirement ratio for foreign currency liabilities was set at 29.5%.