Bank of Mozambique Cuts Benchmark Rate to 8.25%

The Bank of Mozambique decided on October 16th to cut the benchmark interest rate by 50 bps to 8.25 percent. It is the third rate cut this year, as the central bank considers that both the GDP and the inflation rate are consistent with 2013 target.

Preliminary estimates show that the Mozambican GDP grew by an annual 8.7 percent in the second quarter of 2013, boosted by higher mining and agricultural production (up by 30.3 percent and 9.5 percent, respectively). The transport and communication sector expanded 15.5 percent. 

The inflation rate has been on a downward trend since May, due to higher supply of fruits and vegetables; the appreciation of the Metical against the South African Rand; its stability against the American Dollar and the decrease in commodities’ prices. In September of 2013, Maputo’s monthly inflation rate dropped for the fifth straight month, while prices across the whole country accelerated 0.24 percent from August. 

In August, while private sector indebtedness increased 32.2 percent year-on-year, the economic climate indicator dropped for the third month in a row, hurt by lower demand and employment expectations, Bank of Mozambique said. 

The Bank of Mozambique decided to intervene in the interbank markets in order to ensure that the stock of base money does not surpass 44729 million Meticais, at the end of October of 2013. It also decided to cut the Standing Lending Facility interest rate by 50 bps to 8.25 percent; maintain the Standing Deposit Facility interest rate at 1.5 percent, and the Reserve Requirements Ratio unchanged at 8.0 percent.

Bank of Mozambique Cuts Benchmark Rate to 8.25%

Joana Taborda |
10/16/2013 5:50:08 PM