Mozambican banks lower November prime rate to 16%

Login

Register

http://www.clubofmozambique.com/

Mozambican banks lower November prime rate to 16%

1:52 CAT | 31 Oct 2025

File photo: Lusa

The benchmark interest rate for credit in Mozambique will fall by 0.50 percentage points in November, to 16%, the Mozambican Banking Association (AMB) announced today.

Since January 2024, the rate, known as the ‘prime rate’, has been progressively falling, after six consecutive months at a high of 24.1%. Fluctuations in the ‘prime rate’ are associated with the monetary policy interest rate (MIMO rate, which influences the formula for calculating the ‘prime rate’) set by the central bank to control inflation.

In August it had fallen to 17.20% and in September to 16.5%, remaining unchanged during the month of October by decision of the AMB, despite the fact that, days earlier, on September 29th, the Monetary Policy Committee (CPMO) of the Bank of Mozambique had cut, for the tenth consecutive time, the MIMO monetary policy interest rate by 0.50 percentage points, to 9.75%.

“This measure stems essentially from the maintenance of single-digit inflation prospects in the medium term, partly reflecting the stability of the exchange rate and the favourable trend in international commodity prices, notwithstanding the prevalence at the domestic level of high risks and uncertainties associated with the projections,” the Governor of the Bank of Mozambique, Rogério Zandamela, told a press conference in Maputo at the end of the CPMO meeting, which is held every two months.

Mozambique’s benchmark interest rate has been fixed at 17.25% since September 2022, following intervention by the central bank, which then initiated consecutive cuts starting on January 31, 2024, when it was reduced to 16.5%.

“The CPMO will continue the process of normalizing the minimum rate in the medium term, however, in modest magnitudes – I would say increasingly modest – the pace and magnitude will continue to depend on inflation prospects, as well as the assessment of risks and uncertainties underlying medium-term projections,” Zandamela said at the time.

The governor recalled that this “normalization process” began in early 2024, with a then-estimated, and now realized, timeframe of “24 to 36 months,” ultimately “benefiting” families, businesses, and the state, accumulating a decrease of 700 basis points.

“It was a huge gain for the system,” he pointed out, although acknowledging that the benchmark interest rate for banks’ clients also “decreased substantially”, by about 600 basis points in the same period, without fully mirroring the drop in the central bank’s key interest rate, as it depends on the profile of those clients.

Source: Lusa