Angola Monetary Policy March 2018

Angola: Central Bank keeps main interest rate unchanged in March

At its monthly meeting held on 30 March, the National Bank of Angola (Banco Nacional de Angola, BNA) left the main interest rate unchanged at 18.00%. The BNA also left the permanent lending interest unchanged at 20.00% and the liquidity absorption facilities was kept at 0.00%. The reserve ratio coefficients in both national and foreign currencies were left intact at 21.00% and 15.00%, respectively.

The latest monetary decision comes against a backdrop of elevated inflation in the country. While inflation in the province of Luanda reached a two-year low of 23.4% in February (January: 25.2%), price pressures remain too elevated for the Bank to lower rates anytime soon. In February, month-on-month consumer prices rose 1.1% (January: +1.4% month-on-month) and the monetary base in local currency grew 2.6% over the previous month. Raising rates to lower inflation would be ill-timed because it would stoke price pressures and negatively impact economic activity, particularly in the country’s non-oil sector.

The press release was devoid of any forward guidance, but monetary conditions are expected to remain tight in the foreseeable future given high inflation in the country. Any future rate decision will depend on incoming data from the real and monetary sectors.

The next monetary policy meeting is scheduled for 30 April.

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