Mozambique's central bank held its benchmark standing facility rate steady at 8.25 percent, adding that it would intervene in interbank markets to reach a monetary base of 48.023 billion meticais in June, down from a preliminary 48.122 billion in May, 1.2 percent above the bank's estimates.
In May the Bank of Mozambique (BM) targeted a monetary base of 47.533 billion meticais, but said today the base had expanded due to strong demand for notes and coins from cash withdrawals in connection with the tobacco marketing campaign that peaks in May and June.
The Bank of Mozambique, which has kept rates steady since last October, also said inflation in May reflected the seasonal effect of the early part of the cool season, which is conducive to production of fresh produce, along with the stability of the metrical currency and liquidity in financial markets that is in line with the bank's objectives.
Mozambique's inflation rate rose slightly to 2.91 percent in May from 2.87 percent in April.
Mozambique's Net International Reserves declined by US$ 23.9 million to $3.1772 billion at the end of May, the equivalent of 4.5 months of imports.
End-May, the metrical was quoted at 30.63 to the U.S. dollar, a monthly appreciation of 0.07 percent and a cumulative depreciation of 2.27 percent this year.
Provisional data for April show an increase of 9 basis points in commercial bank's average interest rate for one-year loans to borrowers to 21.10 percent while the average rate on deposits was 9.39 percent.
Last month Mozambique's Trade Minister Armando Inroga called for a drop in the lending rates offered by commercial banks. He said the central bank had been cutting rates for the last four years but commercial banks "have been timid in responding to that," he said according to local press.
The local representative of the International Monetary Fund (IMF) also said in January that commercial banking rates were high and made public access to credit more difficult.