Bank of Cabo Verde reduces base interest rate to 4.25 pct

3 March 2014

The base interest rate in Cabo Verde (Cape Verde) has been reduced by 150 basis points to 4.25 percent, the archipelago’s central bank said Friday in Praia, which noted that the new rate would be applied as of 1 March.

According to the Bank of Cabo Verde, the drop in the interest rate was intended to boost economic activity as well as increase funding of investment projects, and it had yet to be seen if retail banks would follow the rate drop.

“The impacts intended from these measures will be greater if they are combined with effective execution of other economic policy measures of a structural nature, with a view to reducing economic risks (…) as well as to increase potential growth,” noted the Bank of Cabo Verde.

The central bank explained its decision to lower the interest rate by noting that, although the economic outlook was less favourable, there is currently no pressure on its balance of payments or its consumer price index.

The permanent liquidity facility rate, which is pegged to the base rate, was also reduced by 150 basis points to 7.25 percent.

The permanent absorption rate remained at 1 percent. (macauhub)