FX.co ★ Mozambique Trims Key Rate for 8th Meeting

The Bank of Mozambique has announced a reduction in its key MIMO interest rate by 50 basis points, bringing it down to 11.75% during its regular meeting on March 26, 2025. This action represents the eighth consecutive decrease, lowering borrowing costs to their lowest level since 2020. Central bank officials justified the move by citing a sustained forecast for single-digit inflation over the medium term. However, the annual inflation rate accelerated for the fifth consecutive month, reaching 4.74% in February 2025, the highest since November 2023. The central bank acknowledged increasing risks and uncertainties affecting inflation projections. Factors poised to drive inflation upwards in the medium term include escalating fiscal risks due to challenges in securing state budget funding, along with impacts from climate shocks and post-election tensions influencing the costs of goods and services. In terms of economic growth, a moderate expansion is anticipated over the medium term.