The Bank of Cabo Verde (BCV) decided to reduce the interest rate of the marginal lending facility by 1.5 percentage points to “improve the effectiveness of the monetary transmission mechanism,” the central bank said in a statement.
The remaining interest rates – principal, permanent liquidity-absorbing facility and rediscount – remained unchanged at 1.50%, 0.1% and 5.50%, respectively, under the decisions of the BCV, meeting in an ordinary session on 31 May.
The BCV hopes that this decision will be followed by commercial banks, noting that the measure “… has the potential to strengthen the monetary policy stance towards a greater stimulus to credit and economic growth.”
The central bank said in the statement that the rate cut could lead to a marginal increase in credit to the economy in 2019 and 2020 and more significantly in 2021. (Macauhub)