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Hopes rise for interest rate drop

Interest rates followed inflation all the way up; why haven't they followed it all the way back down again?

Today’s front pages in Maputo. Photo © Faizal Chauque / Zitamar News

Good morning – with apologies for the late sending of yesterday's newsletter, here. Look out later on today for today's Daily, and our Week in Review.

Relief may be on the way for the beleaguered Mozambican economy, with the International Monetary Fund (IMF) recommending that monetary policy can now be loosened, given the Bank of Mozambique’s success in bringing inflation under control.

The latest from Zitamar News:

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A dam breach at the Fura Gems ruby mine in Montepuez last Monday caused a flood, leaving the main mining pit at Gemfields’ MML project inoperable and damaging much of the surrounding area.
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From the Zitamar Live Blog:

Zitamar Mozambique Live Blog
Renamo, Mozambique’s largest opposition party, is holding a meeting of its National Political Commission today. It is the first meeting since party leader Ossufo Momade’s term of office according to party rules ended on 17 January. A press briefing will be given at the end of the meeting at 5pm. The meeting is expected to call a session of the National Council, which can select a presidential candidate and which can also call a meeting of the party congress where the party leader is selected. It comes after several Renamo politicians have said that they will or may seek to challenge Momade for the party leadership. Picture: Ossufo Momade seen greeting Renamo members at a meeting of the party’s National Council in August 2023. Credit: Faizal Chauque / Zitamar News

Indeed, the central bank has been more successful than the IMF had hoped, with inflation falling below the bottom of the IMF’s target range of 6-12% per year. It fell below 6% in June last year, on the IMF’s figures, and at the end of last year the fund was expecting annual inflation for 2023 to be around 4%.

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