Bloomberg News

Mozambique Central Bank Cuts Key Rate to 15% as Inflation Slows

December 13, 2011

Dec. 13 (Bloomberg) -- Mozambique’s central bank reduced its benchmark interest rate by one percentage point to help boost economic growth in the southern African country as inflation slows.

The standing lending facility rate was reduced to 15 percent, the Maputo-based Bank of Mozambique said in an e-mailed statement yesterday. The rate was last cut by half a percentage point on Aug. 11. The bank kept its interest rate on the standing deposit facility unchanged at 5 percent.

Inflation in Maputo, which is tracked by the central bank, eased to 7.7 percent in November from 8.3 percent a month earlier, the statistics office said Dec. 6. Mozambique’s metical has gained 22 percent against the dollar this year, the second- best performing currency of more than 170 tracked by Bloomberg.

The bank also said it will increase money supply in the economy to as much as 35.79 billion meticais ($1.21 billion) by the end of December. That’s an increase from the 34 billion meticais limit for November. The central bank also reduced the required deposit holding for banks by a quarter of a percentage point to 8.5 percent.

The central bank plans to “cautiously” ease monetary policy, the government said in a letter posted on the International Monetary Fund’s website on Dec. 9. The economy will probably expand about 8 percent a year in the “medium term,” it said.

--Editors: Gordon Bell, Ben Holland, Antony Sguazzin, Emily Bowers

To contact the reporter on this story: Fred Katerere in Maputo at fkaterere@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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