FX.co ★ Mozambique Cuts Rates to 9.25%, Lowest Since 2015

The Bank of Mozambique reduced its main policy rate by 25 basis points to 9.25% at its inaugural meeting in 2026, furthering an easing cycle initiated in 2024. This adjustment brings borrowing costs to their lowest point since 2015. The bank's decision aligns with the projection that inflation will remain in the single digits over the medium term, despite escalating risks and uncertainties arising from recent flooding and heightened trade and geopolitical tensions. Mozambique's inflation rate decelerated to 3.23% in December from 4.38% in November, reaching its lowest mark in 13 months and remaining within the central bank's single-digit inflation target. Nonetheless, inflation is anticipated to rise later this year, spurred by some monetary financing of the budget deficit, the resumption of major LNG construction projects, and the potential for a metical devaluation.