The Bank of Mozambique dropped its standing facility lending interest rate by 100 basis points to 15.00% from 16.00% previously. The Bank also reduced the required reserve ratio by 25bps to 8.5% from 7 Jan 2012. The Bank said [translated]: "The Monetary Policy Committee considers it important to consolidate the results macroeconomic obtained until now, through the continuous enhancement of policy coordination and determination of policy instruments used to regulate liquidity in the market, with a focus on inflation targeting in the short to medium term. In this context, considers the relevant economic agents and the general public redouble efforts to maintain price stability, which is the festive season approaches."
Previously the Bank held its interest rate unchanged, and last cut the key lending rate by 50bps to 16.00% at its August meeting, after raising the rate by 100 basis points to 16.5% at its January meeting this year, where it also raised the interest rate paid on deposits by 100 basis points to 5%, and lifted the required reserve rate by 25 basis points to 9%.
Mozambique saw inflation in it's largest city, Maputo, of 7.7% in November, down from 8.3% in October, 7.8% in September, 7.9% in August, 7.7% in July, and lower than 9.3% in June. Mozambique's economy expanded 6.8% in the June quarter, compared to GDP growth of 8.1% in the March quarter, meanwhile the IMF is forecasting economic growth of 7.5% in 2011 and 7.8% in 2012.
Mozambique's currency, the Metical (MZN) last traded around 26.3 against the US dollar, and according to Bloomberg the Metical has gained about 22 percent against the US dollar so far this year, making it one of the best performing currencies. The Bank of Mozambique next meets on the 10th of January 2012.