Bloomberg News

Mozambique Keeps Benchmark Rate Unchanged as Inflation Slows

February 13, 2012

(Updates with comment by central bank in third paragraph.)

Feb. 13 (Bloomberg) -- Mozambique’s central bank kept its benchmark interest rate unchanged for a second month as inflation in the southern African nation slowed to an almost two-year low.

The standing lending facility rate was kept at 15 percent, the Maputo-based Bank of Mozambique said in an e-mailed statement today. The bank lowered the lending rate 100 basis points in December. It kept the standing deposit rate unchanged at 5 percent today.

Inflation slowed to 6.1 percent in December, the lowest level since January 2010, as the currency’s gains helped to curb price pressures. The central bank reduced borrowing costs last year to help support economic growth as the debt crisis in Europe undermines the global recovery. The bank said it will will target 5.6 percent inflation this year.

Mozambique’s economy expanded 6.7 percent in the third quarter from a year ago, the statistics agency said on Dec. 28. Mozambique’s metical gained 19 percent against the dollar in 2011, the second-best performer of more than 160 currencies tracked by Bloomberg.

The central bank will intervene in the interbank market to make sure that money supply does not exceed 33 billion meticais ($1.2 billion), it said.

Mozambique will “cautiously” ease monetary policy, the government said in a letter posted on the International Monetary Fund’s website on Dec. 9. GDP will grow about 8 percent annually in the “medium term,” it said.

--With assistance from Gordon Bell in Johannesburg. Editors: Gordon Bell, Karl Maier

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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