The reference interest rate for credit in Mozambique will decrease by 0.7 percentage points in September to 16.5%, according to information released by the Mozambican Association of Banks (AMB).
Since January 2024, the rate, known as the ‘prime rate,’ has been gradually declining after six consecutive months at a high of 24.1%.
The fluctuations in the ‘prime rate’ are linked to the monetary policy interest rate (MIMO rate, which influences the calculation formula of the ‘prime rate’) set by the central bank to control inflation.
This reduction follows a recent decrease in August to 17.20%.
The Monetary Policy Committee (CPMO) of the Bank of Mozambique cut the MIMO monetary policy interest rate for the ninth consecutive time on July 31, by 0.75 percentage points, to 10.25%.
“This measure results mainly from the continued consolidation of inflation prospects in the medium term, partly reflecting the favorable trend in international commodity prices, despite the continued domestic risks and uncertainties associated with projections,” said the central bank governor, Rogério Zandamela, at a press conference in Maputo following the CPMO meeting, which takes place every two months.
Zandamela added that, in the medium term, “a gradual recovery of economic activity” is anticipated in Mozambique, excluding the production of Liquefied Natural Gas, “supported in part by the reduction in interest rates and the prospects for implementing projects in strategic areas.”
According to Zandamela’s communication, “the risks and uncertainties associated with inflation projections remain high” and “likely factors for the increase in inflation in the medium term include the impacts of the worsening situation on the State Budget, uncertainties about the speed of restoring productive capacity and the supply of goods and services, and the effects of climatic shocks.”
“The CPMO will continue the process of normalizing the MIMO rate in the medium term. The pace and magnitude will continue to depend on inflation prospects, as well as the assessment of risks and uncertainties underlying medium-term projections,” he said further.
