Mozambique’s central bank cut its benchmark interest rate for the second time in four months to boost economic growth as the inflation rate fell to the lowest in more than two years.
The standing lending facility rate was reduced by 1.25 percentage points to 13.75 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. The standing deposit rate was cut to 3.5 percent from 5 percent.
Inflation in the southern African nation slowed to 3.5 percent in February, the lowest level since December 2009, 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.
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 18 percent against the dollar since the start of last year, the second-best performing currency in the world of more than 160 tracked by Bloomberg.
The central bank 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.
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