Maputo, Feb. 28, 2025 (Lusa) - The Mozambican Banking Association (AMB) announced on Friday that the reference interest rate for credit in Mozambique will fall by 50 percentage points to 18.5% in March, the fifth cut in the last six months.

In the last six months, only in February had the rate remained unchanged, at 19%, after four consecutive monthly cuts, according to the AMB's record.

The rate, known as the prime rate, had been falling since January 2024, after six consecutive months at highs of 24.1%.

Fluctuations in the prime rate are linked to the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) used by the central bank to control inflation.

The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided at the end of January to lower the MIMO monetary policy interest rate from 12.75%, which had been in force since the end of November, to 12.25%. The committee also cut the compulsory reserve coefficients.

"This decision stems from the maintenance of a single-digit inflation outlook in the medium term, despite the increase in risks and uncertainties associated with the projections, particularly those arising from post-election tension, fiscal risk and climate shocks, said the final communiqué of the CPMO meeting, which is held every two months.

The next meeting of the Committee is scheduled for 26 March.

"In addition, the CPMO decided to reduce the mandatory reserve coefficients for liabilities in national currency from 39% to 29% and in foreign currency from 39.50% to 29.50%, to provide more liquidity to support the economy in restoring productive capacity and the supply of goods and services, the meeting communiqué added.

PVJ/ADB // ADB.

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