The Bank of Cape Verde decided to raise its reference interest rates by 25 basis points to counter risks of foreign exchange outflows arising from the interest rate differential with the euro area. Effective Nov. 16, 2026, the policy rate will increase to 2.75%, while the standing lending and deposit facility rates will rise to 3.00% and 2.50%, respectively. The rediscount rate will increase to 3.75%, and the minimum cash reserve requirement will remain at 12%.
Higher international market rates, reflecting expectations of tighter European Central Bank policy, risk widening the differential with domestic rates and putting pressure on official foreign exchange reserves. The increases aim to eliminate that differential. Net international reserves covered 8.8 months of estimated 2026 imports, despite a decline of about CVE 4.6 billion in the current account balance in the first half of the year. Real gross domestic product grew 7.6% over the same period. In September, annual inflation rose to 2.7%, while average inflation fell to 1.5%.
The next Monetary Policy Committee meeting is scheduled for Dec. 8, 2026.