Mozambican Monetary Policy Unchanged in July


The Bank of Mozambique decided to leave the benchmark interest rate on hold at 9.0 percent on July 12th. Although inflation rate is decelerating due to better domestic production of fruits and vegetables and the stability of the metical in the domestic market, downside risks to growth still apply.

In the Monetary Policy Statement, the Bank of Mozambique noted the economy expanded by 4.8 percent yoy in the first quarter of 2013, 4.1 pp down from the previous quarter and 1.1 pp lower than in the same quarter last year. While mining increased by 39 percent yoy, growth in agriculture slowed to 0.1 percent yoy, hurt by the floods that hit the country in the beginning of 2013.  

In June, inflation rate decelerated to -0.38 percent mom and to 4.86 percent yoy. The Bank noticed that until June, the slowdown in prices results mainly from a recovery in domestic production of fruits and fresh vegetables; the stability of the metical against the greenback and a strength of the currency against the South African Rand.

The Bank also noted that in May the economic climate indicator increased for the third consecutive month, boosted by higher employment outlook and better expectations in industry, services and construction.

Preliminary data shows that in May, private sector indebtedness expanded by 4 billion MZN, reaching 129.4 billion MZN, and recording an annual increase of 28.1 percent, the Bank of Mozambique said. Also, in May, the accumulated depreciation of the Metical against the US dollar eased, while strengthening against the South African Rand.

The Bank of Mozambique decided to intervene in the interbank markets in order to ensure that the stock of base money does not surpass 42363 million Meticais, at the end of July 2013. It also decided to maintain the Standing Lending Facility interest rate at 9.0 percent; the Standing Deposit Facility interest rate at 1.75 percent, and the Reserve Requirements Ratio unchanged at 8.0 percent.

Mozambican Monetary Policy Unchanged in July


Joana Taborda | joana.taborda@tradingeconomics.com
7/12/2013 5:47:23 PM