- Decision
- Maintain
- Rate change
- 0 bps
- MIMO policy rate
- 9.25%
The Monetary Policy Committee (CPMO) of the Bank of Mozambique held the MIMO policy rate at 9.25%, citing reduced excess local-currency liquidity in the banking system following the May reserve-requirement increase, while noting that elevated inflation risks and uncertainties persist, notably the duration of the Middle East conflict and its impact on logistics, goods supply and international fuel-price volatility. The hold follows cumulative easing of 100 basis points from 10.25% in July 2025 to 9.25% in January 2026, with the rate then unchanged in March and May. The CPMO said inflation is expected to rise in the short term before falling back to single digits over the medium term, with annual inflation at 7.5% in June 2026 after 7.2% in May, while GDP growth excluding liquefied natural gas (LNG) was estimated at 1.1% in the first quarter of 2026 after 4.8% in the last quarter of 2025. It also said public indebtedness and domestic and external debt arrears remain high and continue to affect the normal functioning of the financial market, although the financial stability committee concluded that the financial system remains stable and resilient and that financial inclusion indicators improved. The medium-term inflation outlook is supported in part by exchange-rate stability, but the Bank of Mozambique said the direction of monetary policy will remain conditioned by its assessment of the risks and uncertainties surrounding the inflation projections.
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.