Africa-Press – Mozambique. Mozambique’s central bank cut its key interest rate for the first time since the height of the global pandemic in 2020 and signalled that it would continue to ease.
The Banco de Moçambique lowered the key rate known by its Portuguese acronym of MIMO to 16.5% from 17.25%.
“Conditions have been created for the beginning of a cycle of gradual reduction of the MIMO rate, with a view to its normalization within a period of 24 to 36 months,” Governor Rogerio Zandamela said Wednesday at a briefing in Maputo, the capital.
“The pace and magnitude of the next adjustments will depend on the inflation outlook, as well as the assessment of the risks and uncertainties underlying medium-term projections,” he said.
The central bank became the second in Africa to cut rates so far this year following Ghana, heeding a suggestion by the International Monetary Fund that it could do so as it has one of the region’s highest real borrowing costs.
Inflation in Mozambique has been cooling while most countries in the region are still battling persistent price growth. It moderated to 5.3% in December from 9.4% a month earlier.
The decision will be welcomed by smaller lenders in the southeast African nation, as they’d been struggling with rising non-performing loans in the high-rate environment, according to the IMF. The move may also help boost economic growth, which the Washington-based lender in January forecast would slow to 5% this year, from 6% in 2023.
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