Mozambique's central bank maintained its benchmark standing facility rate at 7.50 percent, saying the path of inflation remains consistent with its objectives for this year and the expected trend in the medium and long term.
But the Bank of Mozambique, which cut its rate by 75 basis points in November, also noted the "prevalence of risk" in financial markets from external factors that may affect economic stability.
Mozambique's inflation rate fell to 1.79 percent in November from 2.12 percent in October while the exchange rate of the metical currency depreciated by 1.04 percent in November to the U.S. dollar for annual depreciation of 4.31 percent.
The central bank said it would intervene in interbank markets to ensure the monetary base meets its goal of 55.299 billion meticais in December, up from 54.25 billion last month.
The Bank of Mozambique issued the following statement:
"The Monetary Policy Committee of the Bank of Mozambique (MPC) met today in its tenth
second ordinary session of this year, and appreciated the document Monetary Policy,
which reports the Financial information for the months of October and November
2014, as well as the latest developments reported to this month, for some
indicators. The paper analyzes: (i) the development of economic and financial
international and regional; (ii) the evolution of the main macroeconomic and financial indicators
of Mozambique, with emphasis on inflation, monetary and credit aggregates; (iii)
short and medium term projections for inflation; and (iv) the monetary policy measures
necessary to ensure compliance with the 2014 macro-financial program.
I. RECENT DEVELOPMENTS IN INTERNATIONAL AND REGIONAL ECONOMIES
The international situation, in November, was marked by the publication of GDP data
some developed economies and emerging markets for the third quarter of
2014 that reinforce the weak recovery scenario of global economic activity. In the group of
economies more desenvolvidas1
, There is the deterioration of the economic activity in the fall
Japan, with GDP annual contraction of -1.2 against -0.1% in the second quarter,
before a slight recovery in the growth of the eurozone to 0.8% after 0.7% in the II
quarter. In the currency market, the US dollar continued to strengthen against the currencies
the other economies of the block. Central banks this block of countries decided by
maintain its policy interest rates in November, having, however, the Bank
European Central recently announced the postponement of the start of some stimulus measures
the economy of the Euro previously announced.
The economies of emergentes2 market
Stands out the fall, for the second quarter
consecutive, GDP in Brazil in the third quarter of 2014 -0.2% against -0.9% observed in
previous quarter, before a slowdown in annual GDP growth in India to
5.3%, after 5.7% in the II quarter. In October, inflation showed a mixed trend this
group of countries, accelerating Korea and Russia, slowed in Brazil and India and
maintained in China. With the exception of rupees of India, which enjoyed, all other currencies
this group of economies weakened against the US dollar in November, with
especially the Russian ruble accumulating a nominal annual depreciation of 52%. the
central banks of this group of countries remained unchanged its reference interest rates,
with the exception of China reduced its policy rate by 40 basis points to 5.60%.
The economies of SADC3, was recorded in October a slowdown in annual inflation
all, with the exception of Angola, which increased slightly, and South Africa, which remained.
Preliminary information for October indicates an increase in annual inflation Zambia (7.9%)
and a reduction in Mozambique (1.28%). Also in September, all the currencies in the region
recorded nominal losses against the US Dollar, especially the Malawi Kwacha, which
increased the nominal depreciation to 27.9%, while the South African rand reduced to 10.3%.
The central banks of these countries decided to keep its policy interest rates, with
exception of Angola and Malawi, which increased their rates by 25 basis points and 2.5 percentage points, to 9.0% and 25.0%, respectively.
In the international market, the average prices of the main commodities with significant weight in
balance of payments of Mozambique and the behavior of inflation observed in
October, a different evolution, and to highlight the monthly reduction in Brent prices (-
10.3%), cotton (-4.1%), aluminum (-2.2%) and thermal coal (-1.9%) against the price increase of
wheat (0.7%), coking coal (0.2%) and corn (0.2%). In annual terms, stands out
substantial reduction in coking coal prices (-25.3%), wheat (-24.5%) and cotton (-
21.3%), before an increase in the price of aluminum (7.3%). On the last day of November 2014,
the price of Brent barrel stood at USD 70.15, which corresponds to a monthly fall
19.6%, and the rate of the day December 11, 2014 retreated to USD 63.68.
II. DEVELOPMENTS IN THE ECONOMY MOZAMBICAN
According to information published by the National Statistics Institute (INE), referring to
November 2014, the Consumer Price Index (CPI) of Maputo City recorded a
positive change of 0.41%, after 0.06% in October and 0.57% in the same period of 2013. Thus,
accumulated inflation was 0.46%, with the annual average inflation and slowed to 1.11% and
2.44%, respectively. The behavior of monthly inflation in Maputo City reflected the
changes in the prices of food classes and non-alcoholic beverages, whose contribution
the monthly variation of the general index was 0.36 pp and transport, with a contribution of 0.06
p. Products with the largest contributions to the positive monthly price variation were
tomato, coconut and cars.
In line with the trend of the CPI Maputo, the CPI Mozambique, an indicator that incorporates the
price indices of Maputo, Beira and Nampula, recorded in November a variation
positive monthly 0.36%, after 0.13% in October 2014, with the cumulative inflation
increased to 1.21%. The average annual inflation slowed to 1.79% and 2.69%,
respectively. As in Maputo City, the power classes and non-alcoholic beverages and transport were the ones that contributed most to this monthly change, with
0.32 and 0.03 percentage points, respectively.
According to the source, the economic climate indicator of October 2014 suffered a
slight decrease after reaching in September, the highest level ever. This behavior was
determined by the reduction of the confidence index of entrepreneurs' housing sectors and
restoration, industrial production, construction and trade. In the same period, the indicator of
employment perspective recorded for the second consecutive month, down, due,
mainly to the negative evaluation of the entrepreneurs of the transport, construction,
trade and other services.
In the monetary sector, provisional information regarding the November 2014 indicates that the balance of
monetary base, operating variable of monetary policy, stood at 54,246 million
MT, a figure that is in line with estimates made for the month of 54 250 million
MT. The monetary base behavior reflected the increase in notes and coins
outstanding in the amount of 1,028 million MT, before a reduction of bank reserves
54 million. In cumulative and annual terms, the monetary base increased by 6,708 million
meticais (14.1%) and 9,376 million meticais (20.9%).
According to provisional data of monetary accounts reported to October 2014, loans
the national banking system to the private sector increased in the month, 5,025 million
MT (2.9%), and the component denominated in domestic currency contributed 3,670
million, bringing the balance to 170 001 million, of which 80% are denominated in currency
national. In cumulative and annual terms, credit to the private sector expanded by 18.7% and
23.8%, respectively. In the same period, the balance of the broader aggregate currency
(M3), composed of notes and coins in circulation and deposits of residents, excluding the
State increased in the month 9,586 million MT, standing at 245,054 million,
corresponding to a cumulative and annual variation of 13.2% and 21.8%, respectively.
In the external sector, provisional data November point to a reduction of reserves
International net (RIL) in USD 78.7 million in the month under review, essentially explained
by net sales of foreign currency made by the BM in MCI, worth USD 111.8 million and
by foreign exchange losses equivalent to USD 14.8 million, in a scenario where the input
donations was zero (forecast of USD 58.2 million). Thus, the monthly flow of NIR resulted in
balance of $ 2,852,400,000, which corresponds to an accumulated wear USD 143.2
million for the year. In terms of gross international reserves, the balance equivalent to 4 months
import coverage of goods and non-factor services, when the transactions of excluded
In MCI, data relating to November 2014 show that closing the US Dollar was
quoted at 31.22 MT, which corresponds to a monthly, cumulative and annual depreciation
Metical 1.04%, 4.24% and 4.31%, respectively. However, the operations of commercial banks with their customers, it is noted more recently further depreciation of the metical (range
monthly 3.78% and accumulated 13%, up to 10 December), due to a number of factors,
among which stand out the psychological in nature, namely the post-election aftermath
that by bringing elements of political and social instability, transmits to the nervous markets
and negative expectations regarding the maintenance of the pillars supporting the stability
macroeconomic, causing some traders anticipate payment of imports,
while exporting feed higher earnings expectations in a high environment
Meanwhile, the South African Rand was quoted in the currency market to 2.92 MT, which
corresponds to a monthly and accumulated depreciation of Metical of 2.10% and 2.46%,
respectively, and their annual change was in sebtido of appreciation of the national currency
Interbank Money Market (IMM), average interest rates weighted the auctioning of
Treasury Bills presented in November, a mixed performance, with reduced
2PB to 5.39% for maturity of 91 days, increased to 6.79% 1bp to maturity
182 days 7.35% and kept for 364 days. In annual terms, these rates
correspond to increments of 26 bp, 28 bp and 21 bp for maturities of 91, 182 and 364 days,
respectively. Compared to the same period 2013, reported rates above represent
increases of 18pb, 23pb, and 18pb for maturities of 91, 182, and 364 days, respectively.
In the retail market, provisional data reported to October 2014 show that the rates of
average interest charged by commercial banks on loans to their customers operations,
and on deposits, did not change significantly compared to levels
observed in the previous month, when fixing at 20.68% and 9.47%, resulting in annual increases
22 bp and 18 bp, respectively. In the same period, the average prime rate of the banking system
remained at 14.92%, which is equivalent to a fall of 6 bp compared to that observed in
III. POLICY DECISION
The Monetary Policy Committee of the Bank of Mozambique noted the risks prevailing in
international economic and financial environment, which continue to affect the pace of recovery
the global economy, accompanied by high volatility of prices of the main
goods in the international market.
Regarding the national economy, the MPC considered positive the behavior of the main
macroeconomic indicators of Mozambique, with emphasis on inflation, whose path is
remains consistent with the objectives set for 2014 and its aligned projections
with the expected trend in the medium and long term.
However, the MPC noted that the prevalence of risk in the functioning of markets
related to external factors can affect the pillars of macroeconomic stability and the
expectations formation mechanism.
Thus, the MPC decided:
Intervene in interbank markets in order to ensure the fulfillment of the goal of
Monetary Base to December 2014, set at 55,299 million Meticais;
Keep the interest rate of the Standing Lending Facility at 7.5%;
Keep the Standing Deposit Facility interest rate at 1.50%; and
Keep the coefficient of required reserves, set at 8.0%.
The next meeting of the MPC will take place on January 14, 2014."