Mozambique Central Bank Drops Rate 50bps to 16.00%

The Bank of Mozambique reduced its standing facility lending interest rate by 50 basis points to 16.00% from 16.50%.  The Bank also reduced the reserve requirement for commercial banks by 25 basis points to 8.75% from 9.00%.  The Bank said: "The deliberations of the board took into consideration the objectives of economic growth, inflation forecasts for short and medium term and the important challenges that persist in some sectors, with significant weight in the growth of GDP".

The Bank last raised its key lending 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 July, compared to 9.3% in June.  The IMF is forecasting economic growth of 7.5% in 2011 and 7.8% in 2012.

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