Mozambique holds interest rate at 9.25% amid rising inflation risks

Banco de Mocambique has maintained its benchmark interest rate at 9.25 per cent, pausing a long streak of cuts as inflation risks intensify due to mounting economic pressures.

Governor Rogerio Zandamela announced the decision in Maputo, stating that the Monetary Policy Committee opted to hold rates after 13 consecutive reductions from 17.25 per cent, citing a “substantial worsening” in inflation risks.

The bank warned that rising fuel and fertiliser costs, severe flooding and ongoing geopolitical tensions—particularly in the Middle East—could drive up prices in the import-dependent economy.

Authorities also raised concerns over the impact of public debt, post-election unrest and disruptions to key industries, including the closure of a major aluminium plant that previously contributed significantly to export earnings.

Despite projections that inflation may remain in single digits, the central bank said maintaining the current rate reflects a cautious approach to safeguarding macroeconomic stability while supporting economic recovery.

The decision aligns with recent advice from the International Monetary Fund, which urged Mozambique to allow greater exchange rate flexibility to absorb external shocks.

Across Africa, central banks are adopting varied strategies in response to global economic pressures, highlighting the challenge of balancing growth with inflation control amid volatile energy prices.