Angola Monetary Policy November 2021

Angola: Central Bank stands pat in November

At its last scheduled meeting of the year on 30 November, the Monetary Policy Committee of the National Bank of Angola (BNA) decided to leave all its monetary policy instruments unchanged. As such, the basic reference rate remained at 20.00%, the standing liquidity lending facility at 25.00%, the seven-day permanent liquidity absorption facility interest rate at 15.00%, and the coefficients of required reserves at 22.00%.

In contemplating its decision, the Bank noted that credit has continued to grow robustly, suggesting that the economic recovery will continue going forward. Despite a continued increase in the monetary base, the kwanza has appreciated further against the U.S. dollar, boding well for the inflation outlook. The Bank stated that the month-on-month increase in consumer prices eased from September to October. However, it noted that “inflationary pressures persist in the economy, with a scenario of inflection in the trajectory of inflation being expected from 2022 onwards”. As such, the Bank opted to maintain its current stance.

The Bank gave no clear guidance regarding the future monetary policy direction, other than stating that “the restrictive course of monetary policy will be maintained in the short term”. While the majority of panelists expect the Bank to begin an easing cycle in 2022, the timing of this will depend on the cooling of inflationary pressures. This would provide the Bank with room to support the economy in the wake of a multi-year recession.

Analysts at the EIU added:

“We expect the BNA to maintain the policy rate at its current level until inflation moderates in 2022, facilitating a small cut to 18.00% to support access to credit. We expect steady rate cuts over the remainder of the forecast period, with the policy rate reaching 13.50% (which would be its lowest level since 2016) in 2026.”

The next monetary policy meeting is scheduled for 28 January 2022.

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