Angola Monetary Policy March 2019

Angola: Central Bank holds the key policy rate stable in March

At its meeting on 29 March, the Monetary Policy Committee (MPC) of the National Bank of Angola (Banco Nacional de Angola, BNA) kept the key policy rate stable at 15.75%. Furthermore, the BNA left both the interest rate for the permanent liquidity-absorption facility stable at 0.0% and the coefficients of mandatory reserves unchanged at 17.0% for national currency and 15.0% for foreign currency. The decision followed a rate cut in January and marked a pause in the monetary easing cycle.

The Bank’s decision came against the backdrop of slowly receding inflationary pressures. However, despite ticking down to 17.8% in February (January: 17.9%), inflation in the province of Luanda remained elevated at the beginning of the year, leaving the Central Bank with little space for maneuver. Furthermore, the Bank’s move came amid a change in the money supply following January’s cut: The money supply rose 1.0% year-on-year in February, compared to January’s 10.7% contraction.

Looking ahead, the Bank is expected to return to the policy easing cycle this year, although rates are unlikely to be cut significantly amid still-high inflation and the Central Bank’s commitment to maintain prudent monetary policy, reinforced by the country’s financing deal with the IMF.

The next Monetary Policy Committee meeting is scheduled for 30 May 2019.

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