14 December 2011
Maputo — The Monetary Policy Committee of the Bank of Mozambique, meeting in Maputo on Tuesday, has decided to reduce the Bank’s key interest rate (the Standing Lending Facility) by 100 base points, from 16 to 15 per cent, with immediate effect.
This is the interest rate which the commercial banks pay to the central bank for money borrowed on the Interbank Money Market. A reduction in this rate should, in principle, lead the commercial banks to reduce the interest rates they charge on their loans.
The interest rate paid by the central bank to the commercial bank on money they deposit with it (the Standing Deposit Facility) remains unchanged at five per cent.
The Monetary Policy Committee also reduced the Reserves Requirement Coefficient (the amount that commercial banks are obliged to deposit with the central bank to protect against any shocks to the system) from 8.75 to 8.5 per cent. This decision takes effect as from 7 January.
The central bank also decided to intervene in the interbank markets to ensure that the base money supply does not exceed 35.79 billion meticais (about 1.33 billion US dollars) by 31 December.
This is the third time in 2011 that the Bank of Mozambique has altered its key interest rates. The rate for the Standing Lending Facility was hiked to 16.5 per cent in January, as a counter-inflationary measure. The rate came down to 16 per cent in August.
The Monetary Policy Committee says that the latest changes are aimed at contributing to meeting the government’s targets for growth and inflation. By the end of December the annual economic growth rate should be 7.2 per cent, and inflation should be held at no more than 7.5 per cent.
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