Mozambique: Banks lower benchmark rate to 17.4% in July

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Mozambique: Banks lower benchmark rate to 17.4% in July

12:43 CAT | 30 Jun 2025

File photo: Lusa

The benchmark interest rate for credit in Mozambique will fall by 0.6 percentage points in July, to 17.4%, according to information released this Monday by the Mozambican Banking Association (AMB).

Since January 2024, the rate, known as the ‘prime rate’, has been progressively falling, after six consecutive months at highs of 24.1%.

The cut announced today comes after the rate remained unchanged at 18% in June, and a 0.5 percentage point cut in May. The AMB had already cut another 0.5 percentage points in March, when it dropped to 18.5%, the fifth cut in six months, since in February the rate had remained unchanged at 19%, as it did later in April and June.

The fluctuations in the prime rate are linked to the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) set by the central bank to control inflation.

On 30 May, the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to further reduce the MIMO monetary policy interest rate by 0.75 points to 11%, the central bank governor Rogério Zandamela announced.

“This measure is essentially the result of the consolidation of single-digit inflation prospects in the medium term, partly reflecting the favourable trend in international prices of goods and services, despite the continued high risks and uncertainties associated with the projections at domestic level,” Zandamela told a press conference in Maputo at the end of the May CPMO meeting.

When asked by journalists about the prospects for the rate to change by the end of the year, and whether it will reach single digits this year, Zandamela said that the new cut was “within the strategy” defined by the central bank. “The only thing we can say at the moment is that we are in line with the defined trajectory, 24 to 36 months. It may happen sooner, it may not happen. If it does, it is good news.”

The reference interest rate has been fixed at 17.25% since September 2022, after the intervention of the central bank, which then began consecutive cuts from January 31, 2024, when it was reduced to 16.5%.

On March 27 last year it was cut to 15.75%, on May 27 to 15%, on July 31 to 14.25%, on September 30 to 13.5%, on November 27 to 12.75%, on January 27 this year to 12.25% and on March 26 to 11.75%, with a new cut to follow.

“The CPMO will continue with the process of normalizing the minimum rate in the medium term. The pace and magnitude will continue to depend on the inflation outlook, as well as the assessment of risks and uncertainties underlying the medium-term projections,” Zandamela said at the time.

The next CPMO meeting is scheduled for July 30.

Source: Lusa