Mozambique: Banks to drop prime rate to 16.5% in September

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Mozambique: Banks to drop prime rate to 16.5% in September

12:22 CAT | 01 Sep 2025

File photo: Lusa

The benchmark interest rate for credit in Mozambique will fall 0.7 percentage points in September, to 16.5%, according to information released by the Mozambican Banking Association (AMB).

The ‘prime rate’ has been falling since January, after six consecutive months at a high of 24.1%.

Fluctuations in the prime rate are linked to the central bank’s monetary policy interest (MIMO) rate, which influences the prime rate calculation formula.

The cut comes after a further cut in August to 17.20%.

The Monetary Policy Committee (CPMO) of the Bank of Mozambique cut the MIMO monetary policy interest rate by 0.75 percentage points to 10.25% on July 31st, for the ninth consecutive time.

“This measure is essentially a result of the continued consolidation of single-digit inflation prospects in the medium term, reflecting, in part, the favourable trend in international commodity prices, despite the continued domestic risks and uncertainties associated with projections,” central bank governor Rogério Zandamela told a press conference in Maputo at the end of the CPMO meeting, which is held every two months.

Zandamela added that, in the medium term, “a gradual recovery of economic activity is expected” in Mozambique, excluding liquefied natural gas production, “partly favoured by the reduction in interest rates and the prospects for implementing projects in strategic areas”.

According to Rogério Zandamela’s statement, “the risks and uncertainties associated with inflation projections remain high”, and the following stand out as “likely factors for the increase in inflation in the medium term: the impacts of the worsening situation on the State Budget, uncertainties regarding the speed of restoring productive capacity and the supply of goods and services, and the effects of climate shocks”.

“The CPMO will continue the process of normalizing the MIMO rate in the medium term. The pace and magnitude will continue to depend on the inflation outlook, as well as the assessment of the risks and uncertainties underlying the medium-term projections,” he added.

Source: Lusa