The
Monetary Policy Committee of the Bank of Mozambique, meeting in Maputo on
Friday, decided to keep the bank’s key interest rates unchanged for at least
another month.The statement issued by the Committee said that the Standing Lending Facility
(the interest rate paid by the commercial banks to the central bank for money
borrowed on the Interbank Money Market) will remain at 8.25 per cent.The
Standing Deposit Facility (the rate paid by the central bank to the commercial
banks on money they deposit with it) remains at 1.5 per cent, and the
Compulsory Reserves Coefficient - the amount of money that the commercial banks
must deposit with the Bank of Mozambique – is also unchanged at eight per cent.It
is now 13 months since there was any change in the Central Bank’s interest
rates. The last alteration was in October 2013, when the Standing Lending
Facility was cut by 50 base points, from 8.75 to 8.25 per cent.The Committee
also decided that the central bank will intervene in the inter-bank markets in
order to ensure that the monetary base does not exceed 53.786 billion meticais
(about 1.74 billion US dollars, at current exchange rates) by the end of
October. At the end of September, the monetary base had reached 52.846 billion
meticais, 1.5 per cent lower than the target of 53.648 billion meticais.The
monetary base had risen by 863 million meticais in September. Bank reserves had risen by 209 million meticais
(1.1 per cent), and the amount of notes and coins in circulation by 654 million
meticais (two per cent). Over
the past year, the monetary base has risen by 9.4 billion meticais (21.7 per
cent).The statement from the committee noted that, according to the consumer
price index for the three major cities (Maputo, Beira and Nampula), the
September inflation rate was minus 0.17 per cent. September was thus the fifth
successive month in which prices fell.
Prices rose in the first four months of
the year – by 0.98 per cent in January, 0.39 per cent in February, 0.91 per
cent in March and 0.12 per cent in April. Then inflation turned into deflation and prices
began to fall – by 0.38 per cent in May, 0.52 per cent in June, by 0.04 per
cent in July, by 0.55 per cent in August, and now by 0.17 per cent. The result is that
accumulated inflation over the year – from 1 January to 30 September – stands
at 0.71 per cent.The monetary policy committee commented that the behavior of
inflation over the last five months “is explained by the greater offer of fruit
and vegetables, and by the stability of the metical on the exchange market,
supported by the Bank of Mozambique making an adequate amount of foreign
currency available”.At the end of September, the metical was quoted at 30.8 to
the US dollar on the Inter-Bank Exchange Market, which was a depreciation over
the month of 0.95 per cent. Since the start of the year the metical has
depreciated by 2.84 per cent against the dollar.The metical rose against the
South African rand in September. There were 2.75 meticais to the rand at the end
of the month, compared with 2.89 on 31 August. The metical thus
appreciated against the rand by 4.84 per cent over the month, and by 3.51 per
cent since the beginning of the year.Preliminary figures for the end of
September show a fall of 158.3 million US dollars in Mozambique’s net
international reserves. By the end of the month, the reserves stood at 3.093
billion dollars, enough to cover 4.3 months of imports of goods and non-factor
services (excluding the imports made by the foreign investment mega-projects).As
for commodity prices, the Committee noted that the price of Mozambique’s main
export, aluminium, is continuing to increase. In August the world market price of aluminum
rose by 4.29 per cent. Over
the year from September 2013 to August 2014, aluminium prices rose by 11.8 per
cent.Coal prices are continuing to fall, which must be a matter of considerable
concern for the companies who have invested heavily in coal mining in the
western Mozambican province of Tete. In August the price of coking coal fell by 1.4
per cent and of thermal coal by 0.4 per cent. Over the past year the price of
coking coal fell by 24.4 per cent. August also saw another
sharp fall – of 10.4 per cent – in the international price of natural gas.One
item of good news for Mozambique is that the price of the liquid fuels it
imports is continuing to fall. The benchmark Brent Crude was quoted at 94.67
US dollars a barrel on 30 September, but fell to 84.47 dollars a barrel on 16
October.
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