Mozambique holds rate steady as floods destroy farmland

    Mozambique's central bank held its benchmark standing facility rate steady at 8.25 percent, saying monetary policy should be prudent to help ease some of the effects of flooding that has destroyed farmland and infrastructure, impacting the life of thousands.
    The Bank of Mozambique, which cut its rate by 125 basis points in 2013, said it would intervene in interbank markets to ensure that the monetary base does not exceed 44.657 billion meticais in March, down from a 44.994 billion in February, 100 million above the bank's forecast.
    Mozambique's inflation rate eased to 2.38 percent in February from 3.16 percent in January, with the bank saying the inflation rate reflected the worsening price level in South Africa, combined with the nominal depreciation of the medical currency against the U.S. dollar and the rand. Other factors affecting inflation were rising tuition and schooling.
    At the end of February, the metical was quoted at 30.64 U.S. dollar, a monthly depreciation of 0.61 percent and an annual depreciation of 2.3 percent, the bank said.
    Mozambique's international reserves declined by US$ 113 million to $2.792 billion end-February, enough for 4.1 months of imports, with the decline due to net sales of $195 million of foreign exchange by the central bank, including $111 million to pay for liquid fuel imports.
    Mozambique's Gross Domestic Product expanded by 1.4 percent in the third quarter of 2013 from the second quarter for annual growth of 8.1 percent, down from a rate of 8.4 percent in the second.

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