The reference interest rate for bank credit in Mozambique, known as the 'prime rate', will fall from 17.20 to 16.50% this September, according to information released yesterday by the Bank of Mozambique (BdM) and the Mozambican Banking Association (AMB)..

According to the document MZNews had access to, the reduction of 0.7 percentage points marks the fourth consecutive reduction recorded since June and the ninth in the space of 18 months, consolidating a trend towards a slowdown in the cost of money on the domestic market.

Since January 2024, the prime rate has been falling successively, after reaching a peak of 24.1% in the second half of 2023. In February, April and June 2024, the rate remained stable at 18%, but was reduced in March and May by 0.5 percentage points per month.

This year, the rate had been set at 17.40% since July, after a drop of 0.60 percentage points, and remained unchanged at 18% in June, while in April it was at 18.5%. In March, AMB had already cut the rate by 0.5 points, after keeping it at 19% in February.

Changes in the prime rate are directly linked to the monetary policy interest rate, known as the MIMO rate, determined by the Bank of Mozambique (BdM). This rate serves as the basis for calculating the prime rate and is one of the main instruments for controlling inflation.

At the end of July, the central bank's Monetary Policy Committee (MPC) decided to cut the MIMO rate by 0.75 percentage points to 11%, justifying the decision by consolidating the outlook for single-digit inflation in the medium term.

"We are in line with the defined trajectory. It could happen before reaching single digits, it could not. If it does, it's good news," commented BdM governor Rogério Zandamela during the press conference following the CPMO meeting.

In addition, the BdM set the Cost Premium at 6.20%, the margin that represents the risk elements of banking activity not reflected in interbank market operations, which is added to the Single Index to constitute the Prime Rate of the Mozambican Financial System.

 

(Photo DR)