Angola Monetary Policy March 2023

Angola: Central Bank cuts rates again in March

At its 21 March meeting, the Monetary Policy Committee of the National Bank of Angola (BNA) delivered a 100 basis point cut, bringing the basic interest rate down to 17.00% from 18.00%. It also decreased the standing liquidity facility rate from 18.00% to 17.00% and the standing liquidity absorption facility rate from 14.00% to 13.50%. The moves went against the global trend of monetary policy tightening and marked the second consecutive cut in rates.

The Bank’s decision was chiefly due to the ongoing improvement in price conditions. In particular, inflation decreased for the thirteenth consecutive month in February, coming in at 11.6%. The downtrend has largely been driven by an increase in the supply of essential goods and by fuel and food subsidies. Moreover, a stable kwanza in Q1 kept a lid on imported inflation and gave room for the BNA to cut rates again. Additionally, the Bank stated that Credit Suisse’s collapse does not pose any issues to the Angolan financial system.

The Bank did not provide explicit forward guidance, but reiterated that it expects a 3.3% GDP growth rate in 2023, and inflation to end the year between 9.0% and 11.0%. Our panelists expect additional cuts by year-end.

Analysts at Fitch Solutions commented on the monetary policy outlook:

“We believe that the BNA will ease its monetary policy to increase consumer and business demand in the non-oil sector in an effort to offset economic losses from Angola’s oil sector. Disinflation will provide room for the central bank to make such cuts.”

The next monetary policy meeting is scheduled for 19 May.

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