Angola Monetary Policy July 2019

Angola: Central Bank maintains key policy rate at over three-year low in July

At its 26 July meeting, the Monetary Policy Committee (MPC) of the National Bank of Angola (BNA) decided to keep the key policy rate at an over three-year low of 15.50%. Similarly, the BNA also left both the interest rate for the permanent liquidity-absorption facility at 0.0% and the coefficients of mandatory reserves in local currency at 17.0% and for foreign currency at 15.0%. The decision marked a pause in the monetary easing cycle following a 25-basis-point cut in May.

The Bank stayed put against a backdrop of heightened price pressures. That said, inflation in the province of Luanda continued to trend downwards in recent months, moderating to 17.3% in June (May: 17.4%). June’s reading, which marked the lowest print since December 2015, came against the backdrop of slumping global oil prices and despite a continued depreciation of the kwanza which continued to stoke price pressures. Meanwhile, in the accompanying statement, the BNA noted that its decision to hold the key rate reflected an expanding monetary base which rose 3.3% on a monthly basis in June.

Looking ahead, the Bank is expected to return to policy easing later this year in order to prop up the economic recovery. Nevertheless, still-high inflation and the NBA’s commitment to prudent monetary policy, which is reinforced by the country’s financing deal with the IMF, is likely to limit rate cuts.

The next Monetary Policy Committee meeting is scheduled for 27 September.

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