MAPUTO The Bank of Mozambique has opted to keep its key interest rates unchanged for at least the next month.

A statement issued here Tuesday by the central bank’s Monetary Policy Committee following its meeting on Monday, declared that “in light of the projections for inflation in the short and medium term, which continue to reflect the prevalence of factors of pressure, the Committee thinks it important to strengthen the co-ordination of fiscal-monetary and sector policies, as well as the monitoring of the main macro-economic indicators”.

That meant there was no room for reducing interest rates. So the Standing Lending Facility, the interest rate paid by commercial banks to the central bank for money borrowed on the Inter-bank Money Market, will remain at 10.75 per cent.

It rose to this figure, from 9.75 per cent, in mid-February. 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 in February the upward trend resumed.

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

Figure from the National Statistics Institute (INE), based on the consumer prices indices for the three largest cities of Maputo, Nampula and Beira, show an inflation rate for February of 2.24 per cent. Inflation for the first two months of the year was 4.95 per cent.

Source: AIM