Angola: Bank of Angola keeps Basic Interest Rate on hold
May 13, 2016
At its 29 April monthly monetary policy meeting, the National Bank of Angola (Banco Nacional de Angola, BNA) decided to leave the Basic Interest Rate unchanged at 14.00%. April’s decision to keep the Basic Interest Rate unchanged follows March’s 200 basis points’ hike to combat ballooning inflation.
At its press release, the BNA stated that it grounded its decision on the evolution of prices, the exchange rate, other macroeconomic indicators as well as the world economy. The BNA pointed out that the Angolan kwanza, on average, depreciated 1.08% against the previous month, standing at 160.07 AOA per USD in March. Regarding the stock of credit in the economy, the Monetary Policy Committee said that in March it expanded 1.22% in cumulative terms since the beginning of the year.
The Central Bank expressed deep concerns about this year’s inflation data. Consumer prices have increased by over 3.00% each month since the beginning of the year as declining export earnings coupled with dwindling supply of foreign currency have been feeding inflationary pressures. In March, the monthly variation of consumer prices stood at 3.43% while inflation reached 23.6%. Furthermore, the BNA pointed out that the effects of the fiscal and monetary policies taken until now to cap soaring inflation have been limited because the consumption of households and firms is largely dependent on imported goods.
The BNA also appealed to commercial banks and economic institutions strictly to follow government guidelines in order to improve the allocation of limited supply of foreign currency in order to meet all essential needs of the economy. The Bank also exhorted commercial banks to comply with “international best practice in the fight against money laundering and the flight of hard currency”.
Against this backdrop, the Monetary Policy Committee decided to leave the Basic Interest Rate unchanged at 14.00%. The next monetary policy meeting is scheduled for late May.