NKC consultants on Thursday said that inflation in Mozambique should stay at 2.9% and that the central bank should cut reference interest rates by 1.5 percentage points by the end of the year.
“We foresee that the average inflation rate should increase slightly this year, from 2.8% to 2.9%, and we see margin for the Bank of Mozambique to lower the interest rate by another 150 basis points by the end of the year, given the predictable economic weakness and the relatively high value of the rate,” the analysts said in a commentary on inflation in the country.
The document reads that low domestic demand and low international oil prices will help contain inflation, but the risks are on the upside.
The local currency, the metical, has depreciated 13% against the dollar since the beginning of the year, and inflation has been below 3% in the last three months, according to official data.
Source: Lusa via Club of Mozambique