The Bank of Cabo Verde (BCV) cut two percentage points off the benchmark interest rate from 3.5% to 1.5%, under a set of monetary policy measures designed to stimulate the economy of the archipelago, the central bank said in a statement issued on Monday in Praia.
The BCV Board of Directors also decided to reduce the interest rate on the marginal liquidity absorption facility from 0.25% to 0.1%, as well as the marginal lending facility and the rediscount facility from 6% 5% to 4.5% and from 7.5% to 5.5%.
Other measures announced include the absorption of excess liquidity from banks, the elimination of the ceiling set for banks for the use of permanent liquidity-providing facilities and the adoption of a more active and efficient policy for more active communication in relation to policy guidelines from the central bank.
These new interest rates, which come into force on Tuesday, 6 June, and the other measures adopted are essentially aimed at stimulating the financing of viable investment projects and, consequently, economic activity.
Announcing the measures, BCV Governor Joao Serra said he hoped that commercial banks would follow these central bank decisions and added that the persistence of “low prices, unsatisfactory evolution of credit to the economy and a relatively comfortable level of exchange reserves, calls for us to consider more effective measures in monetary policy.” (macauhub)