Mozambique: Reference credit interest rate unchanged in February after four cuts

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Mozambique: Reference credit interest rate unchanged in February after four cuts

1:41 CAT | 30 Jan 2025

File photo: Lusa

The reference interest rate for credit in Mozambique will remain unchanged in February, at 19%, after four consecutive monthly cuts, the Mozambican Banking Association (AMB) announced today.

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

The 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.

The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided on Monday to further reduce the MIMO monetary policy interest rate, from 12.75%, in force since the end of November, to 12.25%, also cutting the mandatory reserve coefficients.

“This decision is due to the maintenance of the inflation outlook in the single digits in the medium term, despite the increase in risks and uncertainties associated with the projections, in particular those arising from post-election tension, fiscal risk and climate shocks,” reads the final statement of the CPMO meeting in Maputo, which is held every two months.

The next meeting of the committee is scheduled for March 26.

“In addition, the CPMO decided to reduce the mandatory reserve coefficients for liabilities in national currency, from 39.0% to 29.0%, and in foreign currency, from 39.50% to 29.50%, aiming to provide more liquidity to support the economy in restoring productive capacity and the supply of goods and services,” the statement adds.

Source: Lusa