MAPUTO, Feb 17 (NNN-AIM) — The Bank of Mozambique has again increased its key interest rates in its struggle to bring down inflation.

A statement issued by the central bank’s Monetary Policy Committee on Monday, after its monthly meeting, announced an increase of 100 basis points in the Standing Lending Facility, the interest rate paid by commercial banks to the central bank for money borrowed on the Interbank Money Market, from 9.75 to 10.75 per cent.

This is the highest interest rate the Bank of Mozambique has charged since September 2012. The rate then fell gradually, reaching 7.5 per cent in November 2014. It remained at that level for a year, but three rate rises in October, November and December 2015 brought it back up to 9.75 per cent. That rate held in January, but now the upward trend has resumed.

The Standing Deposit Facility, the rate paid by the central bank to the commercial banks on money they deposit with it, is raised by 50 basis points, from 3.75 to 4.25 per cent. The Compulsory Reserves Coefficient, the amount of money that the commercial banks must deposit with the Bank of Mozambique, remains unchanged at 10.5 per cent.

The Monetary Policy Committee said it had raised the interest rates because of “the probable impacts of the adverse international conjuncture, as well as the expected effects of drought in the south and centre of the country and floods in the north”.

In addition, the gross domestic product was growing at less than the initial forecast, while “projections for domestic inflation show the prevalence of pressure in the short and medium terms”, the Bank said.

Source: AIM