FILE – For illustration purposes only. [File photo: RC Exclusive Images for Club of Mozambique]The benchmark interest rate for loans in Mozambique will remain unchanged at 15.5% in November for the seventh consecutive month, following three cuts earlier this year, the Mozambican Bankers Association (AMB) announced today.
The decision follows previous ones and is in line with that of the Bank of Mozambique, which at the end of September left its MIMO benchmark policy rate unchanged at 9.25%, a level maintained since January.
The rate set by the AMB, known as the ‘prime rate’, has fallen progressively since January 2024, following six consecutive months at a record high of 24.1%. In January this year, the AMB cut the rate by 10 basis points to 15.7%, keeping it unchanged in February. This was followed by further cuts of 10 basis points each in March and April, after which the rate remained stable in May, June, July, August, September, October and November.
Movements in the ‘prime rate’ are linked to the monetary policy interest rate (MIMO rate), set by the central bank, which influences the formula used to calculate the benchmark rate applied to control inflation.
The Bank of Mozambique kept its benchmark interest rate at 9.25% on 30 September, following an assessment of economic risks.
“Today’s risk assessment shows that we need to maintain a degree of prudence (…) so as not to run the risk of being irresponsible tomorrow,” Bank of Mozambique Governor Felisberto Navalha announced on 30 September, at the end of a meeting of the Monetary Policy Committee in Maputo, which is held every two months.
The MPC decided to leave the rate unchanged, as it had already done in July, May and March, following 12 consecutive cuts over 24 months since January 2024.
Mozambique’s MIMO monetary policy rate had stood at 17.25% since September 2022, following intervention by the central bank, which subsequently began a series of consecutive cuts on 31 January 2024, when it reduced the rate to 16.5%.
In March last year, the Bank of Mozambique began a further cycle of cuts, lowering the rate to 15.75%. The reductions continued at every subsequent meeting until the rate reached 9.75% in September, 9.5% in November and 9.25% in January. The easing cycle was suspended in March amid the effects of the conflict in the Middle East.
Source: Lusa