Country Report Mozambique June 2011

Outlook for 2011-12: Monetary policy

In 2011 we expect that the key policies of the central bank, Banco de Moçambique (BDM), will be to restrain money supply growth and keep the currency, the metical, steady in order to check imported inflation, which poses a threat to social stability. The BDM is expected to let the currency weaken slightly in 2012, in order to boost export competitiveness and take advantage of the forecast drop in global commodity prices. Although the BDM formally targets sustainable levels of monetary aggregates, policy will increasingly prioritise keeping inflation in check, even if this requires further strengthening of the metical.

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