By Central Bank News
The central bank of Mozambique cut its benchmark interest rates by 100 basis points to 9.50 percent, its sixth rate cut this year, saying inflation continues to drop and is expected to finish the year below the central bank’s 5.6 percent target.
The Bank of Mozambique (CPMO), which has now slashed its standing lending facility rate by 550 basis points this year, said its Monetary Policy Committee had taken note of the growing global risks and uncertainties, coupled with moderate growth in most developed and emerging economies.
Nevertheless, the central bank said its board had taken into account that economic growth prospects remained positive.
“Despite adverse international environment, the CPMO found that the main economic and financial indicators of the country continue to evolve in line with the macroeconomic program established in 2012,” the central bank said in a statement.
The CPMO said it would also reduce the interest rate on its standing deposit facility (FPD) by 25 basis points to 2.25 percent while the required reserve ratio would remain at 8.0 percent.
It will also intervene in interbank markets to ensure that the monetary base expands to a maximum balance of 39,136 billion meticais by the end of this month.
Mozambique’s inflation rate rose slightly to 1.8 percent in October from 1.55 percent in September while the Gross Domestic Product rose by 0.4 percent in the second quarter from the first quarter, for an annual rate of 8.0 percent, up from 6.3 percent in the first quarter.
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