- Decision
- Maintain
- Rate change
- 0 bps
- MIMO policy rate
- 9.25%
The Bank of Mozambique’s Monetary Policy Committee (CPMO) held the MIMO policy rate at 9.25% and approved a new reserve requirement regime from the next maintenance period, citing elevated uncertainty over climate shocks and geopolitical tensions amid a slow economic recovery. Over the past year, the MIMO rate was cut from 9.75% to 9.50% in November 2025 and to 9.25% in January 2026, then held. The 18-month regime will allow banks to deduct from local-currency reserves eligible new financing for companies supporting import substitution or increased exports, with lending priced at MIMO plus up to 150 basis points depending on purpose. Annual inflation slowed to 6.5% in August from 7.5% in July, but the central bank expects a near-term increase before inflation eases to single digits over the medium term. Real gross domestic product grew 1.7% year on year in the second quarter, while persistent domestic and external public debt arrears continued to disrupt financial-market functioning. Foreign-exchange turnover remained high and the metical broadly stable, supported by liquefied natural gas projects and extractive industries. Risks remain centred on geopolitical tensions in the Middle East and Europe and their potential effects on global fuel and food prices. The CPMO reaffirmed its price-stability commitment and said it would monitor risks and take corrective measures if necessary.
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 and holds on May 25, July 29 and September 30 as risks intensified. The cuts were driven by a sustained single-digit inflation outlook underpinned by MZN stability, favourable international commodity prices, earlier policy action and contained domestic demand, although the bank consistently stressed fiscal deterioration, rising domestic public debt, climate shocks, weak productive capacity and supply, and later debt-payment arrears that impaired financial markets, bank liquidity and country risk.
In decisions through July, floods, trade and geopolitical tensions and the Middle East conflict led the bank to signal that easing was nearing its end and then hold at 9.25%, as logistics and fuel disruptions, goods-supply pressures and volatile international fuel and food prices worsened inflation risks. The September hold reflected elevated uncertainty over climate shocks and prolonged geopolitical tensions in the Middle East and Europe, their potential effects on international fuel and food prices, and a slow economic recovery. Annual inflation slowed to 6.5% in August from 7.5% in July, and underlying inflation also declined, although the bank expected inflation to rise in the short term due to imported inflation and higher fruit and vegetable prices before easing to a single digit in the medium term.
After raising the reserve requirement on MZN liabilities to 39.0% from 29.0% in May and keeping the ratio on foreign currency liabilities at 29.5%, the bank in September announced an 18-month regime allowing new bank financing to firms that substitute imports or increase exports to be deducted from the domestic-currency reserve component, with lending priced at the MIMO policy rate plus a possible 150-basis-point margin depending on purpose.