Angola Monetary Policy September 2018


Angola: Central Bank keeps policy rate unchanged in September

September 21, 2018

At its 21 September meeting, the Monetary Policy Committee (MPC) of the National Bank of Angola (Banco Nacional de Angola, BNA) decided to hold the key policy rate stable at 16.50%. The decision followed the first rate cut in four years in July and was in line with the expectations of our analysts who unanimously expected the rate to end this year at July’s level.

Despite the gradual moderation of inflationary pressures in recent months, elevated headline inflation was the key factor behind the Bank’s decision to “hold” in September. Inflation in the province of Luanda inched down from 19.5% in July to 19.0% in August, which was the lowest reading in over two-and-a-half years. However, inflationary pressures remained high—reducing the Central Bank’s scope for loosening its monetary policy stance further. The Bank also considered the evolution of the monetary base for its decision; the money supply in national currency contracted both in month-on-month and year-on-year terms in August.

As it stands, the economy is expected to recover this year and gain traction next year, following a two-year recession and worse-than-expected economic growth at the outset of the year. Whereas a rate cut by the end of the year cannot be ruled out, high inflationary pressures, sustained risk aversion towards emerging markets among global investors and rising interest rates in the U.S. are likely to prevent the Bank from softening its stance in the coming months, with the earlier announced cooperation with the IMF adding further uncertainty into the equation.

The next Monetary Policy Committee meeting is scheduled for 26 November.

Our panelists expect monetary conditions to remain stable in the coming months and see the rate ending this year at 16.50%, before falling to 15.00% by the end of 2019.

Author:, Research Team Manager

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Angola Monetary Policy Chart

Angola Monetary Policy August 2018

Note: BNA Basic Reference Rate (%, eop)
Source: National Bank of Angola

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