Maputo, Mozambique – Mozambique’s central bank has kept its main policy interest rate at 9.25 per cent, pausing a record run of cuts as rising public debt, post election unrest, severe flooding and global geopolitical tensions add uncertainty to the country’s inflation outlook.
Okay News reports that Bank of Mozambique Governor Rogerio Zandamela announced the decision in Maputo, saying the Monetary Policy Committee chose to hold after 13 consecutive reductions from 17.25 per cent, citing a “substantial worsening” of risks around future inflation, including the potential impact of higher energy prices if Middle East tensions persist.
The central bank warned that although current projections still see annual inflation in single digits, domestic pressures from rising fuel and fertiliser costs, which Mozambique imports entirely, alongside damage from the worst flooding in at least 25 years and the closure of a major aluminium plant that once generated about one fifth of export earnings, could all feed into higher local prices and strain external accounts.
Officials said maintaining the 9.25 per cent policy rate reflects a cautious stance aimed at preserving macroeconomic stability while the economy continues to recover from recent shocks, and follows International Monetary Fund advice in February that Mozambique allow more flexibility in the exchange rate to manage potential currency pressures.
The latest move contrasts with earlier aggressive easing designed to support growth after a series of climate and industrial disruptions, underlining the balancing act Mozambique faces between nurturing recovery and keeping inflation under control as global energy costs remain vulnerable to conflict related supply shocks.
Across Africa, central banks have taken different paths in response to similar external headwinds, with the Bank of Uganda holding its benchmark rate at 9.75 per cent in February as inflation stayed subdued, while the Bank of Zambia cut for a second straight meeting to 13.5 per cent and Nigeria’s central bank trimmed its main rate to 26.5 per cent as inflation eased modestly from recent highs.
These divergent policy choices highlight how varying domestic conditions, from debt levels and exchange rate pressures to exposure to energy imports, are shaping monetary strategies on the continent, even as all remain alert to the risk that higher global oil prices linked to geopolitical tensions could reignite inflation.
