Mozambique's central bank kept its benchmark interest rate on its standing facility steady at 9.5 percent for the fourth month in a row and said it was ready to help mitigate the direct and indirect effects of flooding on the country's economy.
In light of "this difficult internal situation," the Bank of Mozambique (CPMO) said it would ensure that the monetary base did not exceed 37.163 billion meticais in late February, down from a target of 38.50 billion at the end of January.
The central bank, which cut rates by 550 basis points in 2012, said the rise in prices in January partly reflects the flooding, hitting the supply of goods and services in several urban areas and markets.
Mozambique's inflation rate rose by 1.35 percent in January from December, for an annual rate of 2.73 percent, up from December's rate of 2.02 percent.
Widespread flooding has affected large parts of Mozambique, affecting a quarter of million people and killing at least 48 people in the southern part of the country, according to news reports.
Mozambique's Gross Domestic Product expanded by 0.4 percent in the second quarter of 2012 from the first quarter for an annual increase of 8.0 percent, up from 6.3 percent in the first quarter.
During January, Mozambique's currency, the metical, depreciated by 1.58 percent against the U.S. dollar for an annual depreciation of 10.6 percent, the bank said.
The average interest rate on one-year commercial loans to the public was 21.38 percent in December 2012, a fall of 11 basis points, the Mozambique central bank said.