Mozambican Central Bank cuts interest rates
2012-11-14 10:01:49
The Bank of Mozambique decided to cut its key interest rates once more, for the fifth time this year, during its Monetary Policy Committee meeting on Tuesday.
It is a cut of 100 base points in the Standing Lending Facility which is the interest rate paid by the commercial banks to the central bank for money borrowed on the Interbank Money Market.
The rate falls from 10.5 percent to 9.5 percent. At the beginning of 2012, the Standing Lending Facility rate was 15 percent, according to its press release.
The interest rate paid by the central bank to the commercial banks on money they deposit with it (the Standing Deposit Facility) falls by 25 base points, from 2.5 percent to 2.25 percent.
The amount of money that the commercial banks must deposit with the Bank of Mozambique remains at 8 percent.
The statement from the Monetary Policy Committee said despite the adverse international conjuncture, the country's main economic and financial indicators are continuing to evolve in line with the macroeconomic program established for 2012.
"Inflation remained low and the Bank predicted that by the end of the year it will be lower than the target figure of 5.6 percent.
This is a very conservative prediction, since what Mozambique is currently experiencing is not inflation but deflation.
According to the figures released by the National Statistics Institute (INE) earlier this month, inflation from January to the end of October was minus 0.11 percent.
This is the lowest inflation Mozambique has recorded since the introduction of structural adjustment measures in 1987.
Inflation from January to October in 2010 was 11.7 percent, and for the same period in 2011 it was 4.15 percent.
Yearly inflation as from Nov. 1, 2011 to Oct. 31, 2012 was 1.8 percent. Yearly inflation at the end of October 2011 was 9.5 percent, and at the end of October 2010 it was 15.27 percent.
Currently, Mozambique is experiencing the lowest inflation of any country in the Southern African Development Community ( SADC).
The Monetary Policy Committee statement said that the Mozambican currency, the metical, is depreciating against the U.S. dollar, but is gaining value against the currency of its main trading partner, the South African rand.
On Oct. 31, the metical was quoted at 29.4 to the dollar on the Interbank Exchange Market. This was a depreciation of 2.3 percent since the end of September.
Over the past year the metical has depreciated by 8.77 percent against the dollar, which compares with a sharp appreciation of 24. 62 percent in the year from Nov. 1, 2010 to Oct. 31, 2011.