February 26, 2018 / 4:34 PM / a year ago

UPDATE 1-Mozambique cuts key lending rate to 19 percent

(Adds details)

MAPUTO, Feb 26 (Reuters) - Mozambique’s central bank slashed its benchmark interest rate on Monday for the fourth meeting in a row as currency strength continues to slow consumer price inflation.

The permanent liquidity facility interest rate was lowered by 150 basis points to 19 percent, its lowest since September 2016. The monetary policy interest rate, or MIMO, was cut by the same margin to 18 percent. “The further improvement of the inflation indicator and the medium-term projections justifies the further reduction of interest rates,” Bank of Mozambique governor Rogério Zandamela told a news conference.

Consumer price inflation in the southern African country has dropped to 3.84 percent from as high as 23.7 percent, thanks largely to a recovery in the metical currency that has reduced the cost of imports.

The metical has weakened to around 61 per U.S. dollar from 58 at the end of 2017 after gaining from 71 per dollar a year ago.

Mozambique, one of the world’s poorest countries, discovered substantial offshore gas reserves seven years ago and hopes to become a major exporter of liquefied natural gas. (Reporting by Manuel Mucari; Editing by James Macharia and Catherine Evans)

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