- Decision
- Maintain
- Rate change
- 0 bps
- MIMO policy rate
- 9.25%
The Monetary Policy Committee (CPMO) of the Banco de Moçambique kept the monetary policy rate (MIMO) unchanged at 9.25 percent on 23 March 2026, halting the easing cycle as the eruption of conflict in the Middle East, related supply-chain disruptions, and weather-induced shocks have sharply heightened external and domestic risks and pushed the inflation outlook higher. The pause follows a cumulative 300 bp of cuts since January 2025, including a 25 bp reduction to the current 9.25 percent in January 2026. Headline inflation ticked up to 3.2 percent year on year in February from 3.0 percent in January, while core inflation was steady, and the central bank now expects price pressures to rise in the short to medium term despite a stable metical. GDP expanded by 4.7 percent in Q4 2025 after a 0.9 percent contraction in the previous quarter, yet the committee foresees only a gradual, slower recovery ahead amid climate shocks and a likely global slowdown. Domestic public debt climbed to MZN 487.3 billion—up MZN 12.7 billion since December 2025—constraining financial-market functioning and keeping interbank rates rigid. Globally, the committee cited the uncertain duration and magnitude of the Middle East conflict and its impact on energy and food prices as key upside risks to inflation. Monetary policy will remain contingent on the unfolding of these internal and external risks and uncertainties.
Rate evolution
The Bank of Mozambique cut the MIMO policy rate by 250 basis points from 11.75% to 9.25%, with a steady easing sequence giving way to a pause in March 2026, a second hold on May 25 and a third on July 29 as risks intensified. The cuts were driven by a sustained single-digit inflation outlook underpinned by Metical stability, favourable international commodity prices, earlier policy action and later contained domestic demand, even as activity outside liquefied natural gas was weak and expected to recover only gradually. But the bank consistently stressed high uncertainty around fiscal deterioration, rising domestic public debt, climate shocks and the slow rebuilding of productive capacity and supply, then around delays in payment of domestic and external public debt that impaired securities and interbank markets, affected bank liquidity and weighed on country risk.
In the latest decisions it said floods, intensifying trade and geopolitical tensions and then the Middle East conflict had materially worsened inflation risks through logistics disruptions, domestic fuel price adjustments, intermittent fuel supply and higher energy and food prices, and later through pressure on goods supply and volatility in international fuel prices, prompting it first to signal the easing cycle was nearing its end and then to hold at 9.25% in March, May and July. Annual inflation rose to 7.5% in June from 7.2% in May after 4.4% in April, and the bank said inflation was likely to rise in the short term before easing back to a single digit in the medium term. It said the July decision was also supported by reduced excess MZN liquidity after it raised the reserve requirement on MZN liabilities to 39.0% from 29.0% in May, kept the ratio on foreign currency liabilities at 29.5%, and maintained that the direction of monetary policy would remain conditioned by its assessment of the risks and uncertainties underlying the inflation projections.