Wednesday, September 12, 2012

Mozambique cuts rates to insure against global risks

    The central bank of Mozambique has reduced its benchmark lending rate by 100 basis points to 10.50 percent as an insurance against a worsening of the sovereign debt crises in the euro zone amidst positive trends in domestic growth and inflation.
    The Monetary Policy Committee of the Bank of Mozambique (CPMO) said the country's economy and inflation continued to develop along its short and medium-term projections for the year.
    "In this context, the CPMO considers its position to continue with the current accommodative monetary policy of greater stimulus to support the expansion of economic activity in an environment of macroeconomic stability and financial sector," the bank said in a statement, adding:
    "The CPMO noted the risks prevailing in the international economic and financial environment, especially those associated with the worsening of the sovereign debt crisis in the Eurozone countries and the risk of contagion."
    The Bank of Mozambique has now cut lending rates by 450 basis points this year. 
    The bank said it was also cutting its interest rate on the Standing Deposit Facility by 100 basis points to 2.50 percent and it would intervene in the interbank market to ensure that the monetary base expands by more than 2 billion meticais to 37,406 billion meticais by late September 2012. The required reserve ratio remains at 8.0 percent.
    The bank said Mozambique's economy expanded by an annual rate of 8.0 percent in the second quarter, according to preliminary data, up from a rate of 6.23 percent in the first quarter. Growth was fueled by mining, transport and communications, manufacturing and trade.
    The Bank of Mozambique said the aggregate annual inflation rate, in cumulative terms, was 4.73 percent in August. 


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