Macroeconomic Forecast Mozambique

Inflation has been one of the major weaknesses in the macroeconomic scenario. But we now see a more stable outlook, reflecting a stern policy stance by the central bank. Food prices are critical in the consumer price basket, and can fluctuate greatly depending on harvests. Also, the monetary authorities struggle to 'sterilise' monies coming from abroad, which swell the monetary base. The metical traded within a fairly narrow range throughout 2006, at about MZN25.5/US$. The central bank has intervened judiciously in the market to prevent unwelcome volatility, but as long as domestic prices are rising faster than those in the

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