The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to maintain the monetary policy interest rate, MIMO rate, at 13.25percent. According to a statement issued by the central bank this Wednesday, the decision is supported by the slight improvement in the outlook for domestic inflation, in the short and medium terms, despite the worsening of risks and uncertainties, especially those associated with fiscal pressure, climate shocks. in the country and the increase in oil and food prices on the international market. In its communiqué, the Bank of Mozambique states that the risks and uncertainties associated with inflation projections have worsened. Internally, there is an increase in fiscal pressure in the face of the enormous challenges facing the country, the uncertainties regarding the extension and magnitude of the effects of COVID-19 on the economy and the impact of climate shocks. Externally, the trend towards an increase in oil and food prices, the worsening of geopolitical tension in Europe, as well as the prevalence of uncertainties regarding the effects of the pandemic.According to the Bank of Mozambique, the prospects inflation rates for the short and medium terms were revised downwards, remaining in single digits. Annual inflation remained stable in December 2021, having settled at 6.7 percent, after 6.8 percent in November, favored by the reduction in the price of food and non-alcoholic beverages, in a context of stability of the Metical. Underlying inflation, which excludes the prices of administered goods and services and fruits and vegetables, has slowed. For the short and medium term, a lesser acceleration of inflation is expected, mainly reflecting the stability of the Metical, despite the prospects of rising food and oil prices on the international market. Economic activity will improve in 2022According to forecasts of the Bank of Mozambique, economic activities may experience an improvement this year, as a result of the relaxation of measures to contain the spread of COVID-19 at a domestic and global level, the execution of natural gas projects in the Rovuma basin and the greater dynamics of the external sector. However, the return to sustainable economic growth will continue to require the deepening of structural reforms in the economy, aimed at strengthening institutions, improving the business environment, attracting investment and generating employment. Domestic public debt increasedIn December 2021, domestic public debt, excluding loan and lease agreements and outstanding liabilities, it increased by 2.4 billion to 220.6 billion Meticais. It should be noted that recent macroeconomic prospects are consistent with maintaining the current level of the MIMO rate in the short term, in order to guarantee low and stable inflation, which is the main objective of the Bank of Mozambique.Source:O País

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