MAPUTO, March 27 (Xinhua) -- The Bank of Mozambique has cut its monetary policy interest rate, from 12.25 percent to 11.75 percent, a move aimed at taming inflation and stabilizing the economy.
The decision was made Wednesday by the central bank's Monetary Policy Committee, amid fiscal uncertainties and economic challenges.
According to a statement released by the bank on Wednesday, inflation rose slightly this year, from 4.69 percent in January to 4.74 percent in February.
"The stability of the national currency and the implemented policies have been crucial in keeping inflation in single digits in the medium term," the statement said.
Mozambique's economy has continued to recover, but challenges remain, the central bank said.
In the fourth quarter of 2024, the gross domestic product (GDP), excluding the liquefied natural gas (LNG) sector, contracted by 3.1 percent, after growing 2.8 percent in the previous quarter.
When LNG is included, GDP contracted by 4.9 percent, after growing by 3.7 percent in the previous quarter.
Meanwhile, internal debt has surged, reaching 447.2 million Mozambican meticais (about 7 million U.S. dollars), an increase of 31.7 million meticais compared to December 2024.
Market interest rates continue to fall, reflecting monetary policy decisions, the central bank said. "The prime rate for credit has followed this trend, enabling more favorable conditions for economic financing."
However, the bank warned that inflation risks remain high due to fiscal pressure, difficulties in mobilizing financial resources, and the impacts of climate shocks and post-election tensions on the economy. ■