Mozambique cuts interest rate by 75 bps, sees steady inflation

By Custodio Cossa

MAPUTO (Reuters) -Mozambique's central bank cut its main interest rate on Friday for the ninth policy meeting in a row, and by a hefty 75 basis points, saying it expected inflation to remain in single digits over the medium term despite lingering domestic risks.

The Bank of Mozambique slashed its main lending rate by 75 basis points to 11.00% from 11.75%, bigger than the 50 bps cut at its last meeting in March.

"This measure is primarily driven by the consolidation of the single-digit inflation outlook over the medium term, partially supported by (a) favourable trend in international prices of goods and services," said central bank governor Rogerio Zandamela.

He added that despite persistent domestic risks and uncertainties associated with the projections, "the national financial system remains stable and resilient."

The Southern African country's annual inflation rate slowed to 3.99% in April from 4.77% in March, after having been on the rise since October's disputed election, which saw the Frelimo party retain power, extending its five-decade rule although observers said the Oct. 9 vote was not free and fair.

(Reporting by Custodio Cossa; Writing by Sfundo Parakozov; Editing by Alison Williams, Joe Bavier and Susan Fenton)

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