Mozambique’s benchmark lending rate will remain at 15.5% in September, marking the fifth consecutive month without a change, the Associação Moçambicana de Bancos (AMB) announced on Monday, 31 August, in a statement published on the Banco de Moçambique (BdM) website.
According to the statement, the prime rate holds at 15.5% in September — the same level as August — following three cuts of 10 basis points each carried out by the AMB in January, March, and April. The rate had moved from 15.8% to 15.7% in January, to 15.6% in March, and to 15.5% in April.
The prime rate serves as one of the key references used to calculate interest rates applied to bank lending and is determined on the basis of the MIMO rate set by the Banco de Moçambique.
At the end of July, the Banco de Moçambique decided to hold the MIMO rate at 9.25%, halting the easing cycle that began in January 2024. The decision was justified by a reduction in metical liquidity in the banking system and by risks associated with the inflation outlook.
The unchanged prime rate means that September will bring no fresh reduction in the benchmark cost of bank credit, following the cuts implemented during the first four months of the year.
“This decision is supported by the reduction in metical liquidity in the banking system resulting from the increase in the mandatory reserve requirement in May, notwithstanding the prevalence of elevated risks and uncertainties associated with inflation projections,” said Banco de Moçambique Governor Rogério Zandamela.
According to the central bank, annual inflation stood at 7.5% in June, up from 7.2% in May, and is expected to continue rising in the near term, driven in part by fuel price dynamics and imported inflation.
Governor Zandamela nonetheless anticipates a return to single-digit inflation over the medium term, underpinned by expectations of exchange rate stability and a moderation in energy and food prices.
The retention of the prime rate at 15.5% confirms that September will see no further reduction in the banking sector’s reference lending rate, following the adjustments made during the first quarter of the year.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=535624
