MAPUTO (Reuters) -Mozambique’s central bank cut its policy rate for the seventh consecutive meeting on Monday but by a smaller margin, saying inflation was expected to remain in single digits but risks to its forecasts had grown because of post-election protests.
The Bank of Mozambique cuts its MIMO interest rate by 50 basis points to 12.25%, following six 75-basis-point cuts in 2024.
The bank also lowered reserve requirements on local- and foreign-currency liabilities to try to support the economy.
The southern African country’s annual inflation rose to 4.15% in December from 2.84% the previous month, likely reflecting the impact of the demonstrations over October’s disputed election result.
More than 300 people have died in the unrest, while cross-border trade has been disrupted and foreign businesses operating locally, including mining companies Gemfields Group and South32 and petrochemical company Sasol have been affected.
Daniel Chapo of the long-ruling Frelimo party was declared winner of the election and sworn in as president this month. The opposition says Frelimo won the vote through rigging, but the party denies that.
Chapo takes over at a time that Mozambique faces a tough financial squeeze because of worsening cyclones, insecurity, delays to planned gas projects and high levels of public debt.
(Reporting by Manuel Mucari and Custodio Cossa; Additional reporting by Bhargav Acharya in Johannesburg;Writing by Sfundo Parakozov;Editing by Alexander Winning and Ros Russell)
