Mozambique Central Bank Cuts Borrowing Costs to 9.5%

Mozambique’s central bank lowered its benchmark lending rate as inflation remains below target and global growth slows, threatening the southern African nation’s expansion.

The standing lending facility was cut 100 basis points, or 1 percentage point, to 9.5 percent, the Maputo-based Bank of Mozambique said in a statement on its website today. It lowered the deposit rate by 25 basis points to 2.25 percent and left level of reserves that lenders must hold with the bank at 8 percent.

“The Monetary Policy Committee took note of the worsening of risks and uncertainty in the global economy,” the bank said. “Despite the adverse international situation, the MPC confirmed that the nation’s main economic and financial indicators are in line with the 2012 macroeconomic plan.”

Mozambique, site of the world’s largest discovery of natural gas in the last decade, has cut rates six of the last seven months as it seeks to bolster the nation’s economy. Gross domestic product expanded 8 percent in the second quarter from a year earlier.

Inflation accelerated to an annual 1.8 percent in October from 1.55 percent a month earlier, according to the statistics agency, below the central bank’s targets of 5.6 percent by the end of December.

To contact the reporter on this story: Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net