The prime rate for credit operations in Mozambique rose from 22.5 percent to 22.6 percent in December, the Mozambican Banking Association (AMB) announced.
The rate calculated monthly by AMB and Banco de Moçambique (BM) is based on a single indexer (calculated by the central bank) which rose from 17.2 percent to 17.3 percent and a cost premium of 5.3 percent (set by AMB), which remains unchanged.
The increases in the prime rate have been associated with the increase in the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) by the central bank, in order to control inflation.
However, the Monetary Policy Committee (MPC) at Wednesday’s meeting signalled a new direction by deciding to keep the MIMO rate unchanged instead of raising it, considering that there are signs of slowing inflation.
In October, “annual inflation for the cities of Maputo, Beira and Nampula slowed to 11.08 percent, after 12.01 percent in September,” the body said.
The creation of the ‘prime rate’ was agreed in 2017 between the central bank and AMB to eliminate the proliferation of reference rates in the cost of money.
At the time, it was launched at 27.75 per cent and has been down 515 basis points since then.
The aim is for all credit operations to be based on a single rate, “plus a margin (‘spread’), which will be added to or subtracted from the prime rate upon risk analysis” of each contract, the promoters explain.