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UPDATE 1-Mozambique's central bank leaves key lending rate at 23.25 percent
December 14, 2016 / 5:02 PM / a year ago

UPDATE 1-Mozambique's central bank leaves key lending rate at 23.25 percent

(Adds governor’s comments)

MAPUTO, Dec 14 (Reuters) - Mozambique’s central bank left its benchmark lending rate at 23.25 percent on Wednesday, its governor said, citing projections of inflation easing thanks to a recovery in the national currency.

The decision comes a day after the IMF cut its 2016 growth forecast for the southern African country to 3.4 percent from 3.7 percent, saying it would require fiscal policy adjustments to pave the way for financial assistance and a recovery program.

Governor Rogerio Zandamela said the decision to keep rates unchanged had been informed by expectations that inflation, which stood at 26.83 percent in November, would fall.

“These measures are justified by the fact that, as of October 2016, some monetary and financial indicators have begun to evolve in the expected direction, especially the exchange rate, which opens up good prospects for short- and medium-term inflation to slow down,” he said.

The metical currency is down by around 60 percent this year, but has recovered to trade at around 72.84 to the dollar on Wednesday, having hit a record low of 81.50 in October.

The currency has been hammered by a suspension of aid from donors including the IMF after news emerged of loans that had not been approved by parliament or disclosed publicly. The IMF said on Tuesday that these amounted to $1.4 billion.

Reporting by Manuel Mucari; Writing by Tiisetso Motsoeneng; Editing by James Macharia

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