Selected Issues Papers

This paper estimates the interest rate pass-through in Cabo Verde. Using monthly data since 2001, we estimate a limited pass-through of monetary policy to banks’ lending rates: a 1-percentage-point policy rate change leads to a 0.19–0.28 increase in average lending rates and 0.13–0.23 in long-term rates. Pass-through is roughly twice as strong during tightening than easing cycles but remains weak overall, including in the current cycle started in May 2023, underscoring challenges for monetary policy transmission.