Bank of Mozambique reduces reference interest rates by 25 basis points

11 August 2017

The Monetary Policy Committee of Banco de Moçambique has reduced by 25 basis points the country’s three reference interest rates, among them the MIMO rate, which fell to 21.50 percent, the central bank informed in a statement released in Maputo.

The rate for marginal lending is now 22.50 percent and for the deposit facility 16 percent, likewise per the decisions resulting from that committee’s latest meeting.

Mozambique’s central bank also announced that it had reduced the reserve requirement ratio for foreign and domestic currency liabilities by 50 basis points to 15.0 percent, effective as from the new constitution period beginning on 7 September 2017.

These decisions were made as Banco de Moçambique warned that the prevalence of risks for prospects of inflation meant caution was required when setting monetary policy.

“The level of internal public indebtedness remains high and represents a risk factor for inflation forecasts. Lower-than-expected public revenue collection in a context of suspended external budget support and high internal indebtedness (97.7 billion meticais) requires more robust fiscal consolidation,” reads the statement released by Banco de Moçambique.

From the central bank’s perspective, other risk factors to take into account are associated to external climatic phenomena (El Niño), price volatility of raw materials and the political situation in neighbouring countries, especially South Africa, which can all impact the desired price trends for various goods and services. (Macauhub)