Bank of Mozambique introduces new benchmark interest rate

14 February 2017

The Bank of Mozambique has decided to introduce a new interest rate to the interbank money market, with effect from 15 April, called the monetary policy rate, Governor Rogerio Zandamela said on Monday in Maputo.

The introduction of this new benchmark rate, which is used by the central bank for liquidity regulation in the interbank money market, is intended to strengthen the mechanism for establishing interest rates in the market as a whole and make this process more transparent and consistent with good international practices, the governor said.

The Bank of Mozambique currently has two interest rates it uses to intervene in that market – the marginal lending liquidity facility, which is the rate that banks have to pay for the central bank to finance them and the standing deposit facility, which pays interest on the funds deposited with the central bank.

Zandamela said that these two rates will remain in force and that the new rate would fluctuate in the range of the first two, during a meeting with the press to publicise the main outputs from the meeting of the Monetary Policy Committee of the Bank of Mozambique.

The committee decided to keep the permanent liquidity facility interest rate at 23.25% and the permanent deposit rate at 16.25% and intervene in the market in order to ensure compliance with the monetary base established for March 2017 of 96.506 billion meticais.

The statement released by the central bank said it had also decided to introduce the principle of a single benchmark exchange rate from 3 April, 2017, resulting from the average exchange rate used by banks in transactions with customers.

At the end of 2016 the Bank of Mozambique introduced a measure requiring commercial banks to report their exchange rates three times a day. (macauhub)