Africa-Press – Cape verde. The Bank of Cabo Verde (BCV) announced on Friday a new increase in the main interest rates, this time by 25 basis points, effective from Monday, continuing the rapprochement with the euro zone.
“The difference between domestic interest rates and those practiced in international markets, particularly in the euro zone, continues to represent a risk for official foreign exchange reserves and for the exchange rate regime”, of fixed parity with the European currency, justified the BCV, in a statement.
In this context, the central bank “maintains the monetary policy guidelines from December, with the aim of gradually reducing the interest rate differential, mitigating the risks of a possible outflow of foreign currency” for more attractive investments.
The basic interest rate in the archipelago will rise to 2.5%, the permanent liquidity provision facility rate will rise to 2.75%, the interest on the permanent liquidity absorption facility will be 1.95% and the rediscount rate will increase to 3.50%.
The minimum cash reserve ratio will remain at 10%.
The next meeting of the BCV Monetary Policy Committee is scheduled for May 6th.
In November, the central bank had raised rates by 25 basis points, followed by a 50 basis point increase in January.
In addition to the exchange rate regime, foreign currency reserves influence the number of months of imports that the country can guarantee and, according to the BCV, the indicator improved at the end of the year, to a coverage of 6.3 months (it had fallen to 5.6 months in the previous quarter).
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