Mozambique: Central Bank Raises Key Rate as Inflation Soars

Central Bank of Mozambique Central Bank of Mozambique

Mozambique’s central bank raised its benchmark policy rate for the second time this year as inflation continues to accelerate.

Policy makers increased the rate to 12.75 percent from 10.75 percent, the Maputo-based central bank said in a statement on its website on Wednesday. In February, the bank lifted the rate by one percentage point.

Inflation accelerated to 12.2 percent in February compared with 2.2 percent six months earlier, according to the National Statistics Institute. The economy grew 5.6 percent in the fourth quarter of 2015, compared with 4.6 percent a year earlier, the statistics office said in February.

The International Monetary Fund last week canceled a mission to the coal-producing nation after it discovered around $1 billion of undisclosed debt and said it changes the fund’s assessment of Mozambique’s macroeconomic outlook. Yields on $727 million of notes due in January 2023 climbed 169 basis points since April 13 to 14.36 percent.

The metical has lost 39 percent against the dollar since the start of last year.

Source: Bloomberg