The reference interest rate for credit in the country will fall by 50 percentage points to 18.50% in March, the fifth monthly cut in the last six months, the Mozambican Banking Association (AMB) announced on Friday 28 February.
According to Lusa, in the last six months, only in February had the rate remained unchanged, at 19 per cent, after four consecutive monthly cuts, according to AMB’s record. The rate, known as the prime rate, had been falling since January 2024, after six straight months of peaking at 24.1%.
Fluctuations in the prime rate are linked to the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) used by the central bank to control inflation.
At the end of January, the Monetary Policy Committee (CPMO) of the Bank of Mozambique announced a further cut in the MIMO monetary policy interest rate from 12.75%, which had been in force since the end of last November, to 12.25%, while also cutting the compulsory reserve coefficients.
‘This decision stems from the maintenance of a single-digit inflation outlook over the medium term, despite the increase in the risks and uncertainties associated with the projections, particularly those arising from post-election tension, fiscal risk and climate shocks,’ said the final communiqué of the CPMO meeting, which is held every two months. The next meeting of the Committee is scheduled for 26 March.
‘In addition, the CPMO decided to reduce the compulsory reserve coefficients for liabilities in national currency from 39 per cent to 29 per cent and in foreign currency from 39.50 per cent to 29.50 per cent, with the aim of providing more liquidity to support the economy in restoring productive capacity and the supply of goods and services,’ the meeting communiqué adds.
