Flood effects could result in reversal of inflation drop in Mozambique: analysts

Mozambique's central bank trimmed its main interest rate by 25 basis points to 9.25% in a decision announced on Wednesday, but flood effects could reverse the drop in inflation pattern. Mozambique's central bank trimmed its main interest rate by 25 basis points to 9.25% in a decision announced on Wednesday. The Bank of Mozambique's last rate decision in November was also a 25-basis-point cut. The Southern African country's annual inflation rate slowed to 3.23% in December from 4.38% in November, its lowest level in 13 months. Monetary financing of the budget deficit, the resumption of construction of mega liquefied natural gas projects and a potential devaluation of the country's metical currency may result in inflation pattern reversal, economic analysts say. Severe floods in the past few weeks could be another factor driving prices higher. The floods have caused widespread damage to infrastructure which the government estimates at $644 million.