Interest Rate Pass-Through in Cabo Verde

Selected Issues Papers, March 10, 2026

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Interest Rate Pass-Through in Cabo Verde

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Bibliographic details

• Authors: Bruno Albuquerque, Nombulelo Gumata
• Published: March 10, 2026
• Series: Selected Issues Papers
• DOI: https://doi.org/10.5089/9798229040297.018

Key findings

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

Data and empirical scope

• Frequency: monthly data.
• Sample start: since 2001.
• Timeframe relevance: includes the current monetary cycle started in May 2023.

Policy and transmission implications

• Limited pass-through implies weaker monetary policy transmission from the central bank policy rate to bank lending rates.
• Asymmetric response: tightening cycles generate roughly twice the pass-through of easing cycles, suggesting differential transmission depending on policy direction.
• The weak overall pass-through, including in the current cycle, highlights challenges for achieving monetary policy goals via interest rate adjustments.

Subjects and keywords (as categorized in the source)

• Subjects: Asset and liability management, Bank credit, Central bank policy rate, Commercial banks, Domestic systemically important banks, Excess liquidity, Financial institutions, Financial services, Interest rate policy, Monetary policy, Money.
• Keywords: Bank credit, BCV interest rate, Cabo Verde, Central bank policy rate, Commercial banks, Domestic systemically important banks, Excess liquidity, Global, IMF country, IMF staff, interest rate channel, interest rate pass-through, Interest rate policy, monetary policy transmission, tightening cycle.

Content in this bundle

• Interest Rate Pass-Through in Cabo Verde; IMF Selected Issues Paper No. 2026/019; January 9, 2026
  • Interest Rate Pass-Through in Cabo Verde; IMF Selected Issues Paper No. 2026/019; January 9, 2026 (Markdown version)
  • Interest Rate Pass-Through in Cabo Verde; IMF Selected Issues Paper No. 2026/019; January 9, 2026 (PDF)