Mozambique Central Bank Keeps Rate Unchanged After Floods

Mozambique’s central bank kept its benchmark interest rate unchanged at 9.5 percent for a third straight month, raising concerns about the impact of recent floods on the economy.

“The Monetary Policy Committee reaffirmed its commitment with a prudent monetary policy,” the Maputo-based Bank of Mozambique said in a statement on its website. “The goal is to mitigate the direct and indirect effects of this shock on the macroeconomic objectives set for this year.”

Mozambique cut its key rate by 550 basis points last year to stimulate the economy as inflation slowed. The economy expanded 6.8 percent in the third quarter from a year earlier, according to the central bank. Inflation accelerated to 2.73 percent in January from 2.02 percent in the previous month, the statistics agency said on Feb. 7.

The southern African nation, site of the world’s largest discovery of natural gas in the past decade, aims to lure as much as $30 billion in investment in the gas industry through 2018.

The MPC left the deposit rate at 2.25 percent and maintained the level of reserves that commercial lenders must hold with the bank at 8 percent, according to the statement. The bank will make its next rate decision on March 11.

The death toll from floods in three of Mozambique’s southern provinces last month rose to 69 and the country forecast it would need more than triple the amount budgeted to help feed and relocate those affected, the National Disaster Management Institute said on Jan. 28.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.