Bank of Mozambique cuts benchmark interest rate to 16.5%

12 April 2018

Mozambique’s monetary policy interest rate, the MIMO rate, was reduced by 150 basis points to 16.5%, according to a decision by the Monetary Policy Committee announced on Wednesday and justified by a favourable rate of inflation.

“The favourable behavior of the inflation indicator, combined with the fact that forecasts for the end of this year indicate that it will be around one digit, justifies maintaining the cycle of interest rate reduction by the Monetary Policy Committee, started in April 2017,” the statement said.

The same committee also decided to reduce the interest rate of the Permanent Liquidity Lending Facility by 100 basis points to 18.0%, maintaining both the Permanent Deposit Facility rate at 12.5%, as well as the Required Reserve Ratio for liabilities in national currency at 14.0%, and in foreign currency at 22%.

Announcing the decisions of the Monetary Policy Committee, the governor of the Bank of Mozambique Rogério Zandamela said the central bank is trying to persuade commercial banks to reduce the interest rates they charge their customers.

The press release from the Mozambican central bank also said that the restricted liquidity of the banking system has seen a downward trend, in a context in which credit to the economy has remained stagnant. (macauhub)