Mozambique central bank cuts interest rate to 9.50% amid debt concerns

Investing.com -- Mozambique’s central bank reduced its monetary policy interest rate from 9.75% to 9.50% on Friday, citing worsening risks and uncertainties in inflation projections.

The Monetary Policy Committee (CPMO) of the Bank of Mozambique implemented this modest rate cut despite concerns about the government’s delayed payments on domestic public debt instruments.

Governor Rogério Zandamela noted that the continued rise in obligations disrupts the functioning of the domestic market, highlighting the challenges facing the country’s financial system.

The decision comes as annual inflation in Mozambique has remained below 5% since the end of 2023, providing the central bank with some flexibility to lower what had been among the world’s highest real interest rates.

The government is under increasing pressure to stimulate economic growth following three consecutive quarters of contraction, balancing the need for monetary easing against debt servicing concerns.

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