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Mozambique: Central Bank Keeps Interest Rates Unchanged

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Mozambique: Central Bank Keeps Interest Rates Unchanged

Maputo — The Monetary Policy Committee (CPMO) of the Bank of Mozambique, meeting in Maputo on Wednesday, decided to keep the central bank’s key interest rates unchanged.

According to a statement from the CPMO, signed by the governor of the Bank, Rogerio Zandamela, the Interbank Money Market Rate (MIMO), used by the central bank for its interventions on the interbank money market to regulate liquidity, remains 10.25 per cent.

Likewise, the Standing Lending Facility (the interest rate paid by the commercial banks to the central bank for money borrowed on the Interbank Money Market) remains 13.25 per cent, while the Standing Deposit Facility (the rate paid by the central bank to the commercial banks on money they deposit with it) remains 7.25 per cent.

The CPMO also decided to hold the compulsory reserve coefficient, the amount of money that the commercial banks must deposit with the Bank of Mozambique, steady at 11.5 per cent for local currency and 34.5 per cent for foreign currency.

The CPMO said the decision to hold rates steady “is justified by the continued prospects that price rises will speed up in the medium term, associated with high risks and uncertainties, in a context where a slow resumption of economic activity is expected in 2021”.

Annual inflation was likely to increase in the short to medium term, but would remain in single digits (i.e. less than 10 per cent). At the end of November annual inflation was 3.27 per cent, a slight increase on the October figure of 3.2 per cent.

There would be a real, albeit slow, increase in Mozambican GDP in 2021, “stimulated by the implantation of the natural gas projects, and by a trend towards a recovery in the demand for Mozambican exports, following the discovery of vaccines against Covid-19”, the CPMO forecast.