Angola: Central Bank maintains interest rate in January
At its 28–29 January meeting, the Monetary Policy Committee of the National Bank of Angola (BNA) maintained its basic reference rate at 15.50%, where it has been since 24 May 2019. In addition, the Bank kept the required reserve ratio in local and foreign currency at 22.0% and 17.0%, respectively. Moreover, the Committee announced the daily fee for excess liquidity at the Central Bank will range from 0.10% to 0.20% depending on the amount of excess. Lastly, the Committee decided to allocate the balance of banks’ reserve accounts with the BNA to two separate accounts. This will make it harder for banks to miss their mandatory reserve requirements and constitutes a de facto tightening of monetary policy.
The decision to keep the basic reference rate unaltered was driven by the Bank’s assessment that previous policy action has had the desired effect on the economy in the face of the pandemic. Specifically, the Committee pointed to strong monetary growth, which should support activity. However, the Bank also highlighted that the disinflationary process has been reverted by the pandemic, with inflation accelerating last year compared to the year prior. To that end, the Bank opted for a de facto tightening, noting that keeping the inflation target close to single digits in 2022 will require a “prudent monetary policy of a restrictive nature”.
In the press release, the Bank reiterated it will continue on the path towards price stability and monitor all monetary factors affecting inflation. This year, our panelists expect the Bank to ease its stance to help the economy regain further momentum in the wake of the pandemic-induced contraction.
The next monetary policy meeting is scheduled for 29 March.