Angola Monetary Policy May 2022


Angola: Central Bank stands pat in May

May 31, 2022

The Monetary Policy Committee of the National Bank of Angola (BNA) held fire at its 31 May meeting. Therefore, the basic reference rate remained at 20.00%, the standing liquidity lending facility at 25.00%, the seven-day permanent absorption liquidity facility interest rate at 15.00% and the required foreign reserve ratio at 22.00%. That said, the Bank altered the reserve ratio in national currency, lowering it to 19.00% from 22.00% in order to support economic activity.

The Bank noted that inflation continued to trend downward through April amid widespread softer price increases. Moreover, survey data highlighted that inflation expectations are moderating alongside inflation: Respondents expect price pressures to ease in the next two months. Downward pressure on inflation stems partially from the kwanza’s continued appreciation vis-à-vis the U.S. dollar; greater demand for Angolan oil amid Western countries’ diversification efforts away from Russian oil and gas have supported the kwanza recently.

While the press release was void of any clear and explicit guidance regarding the future direction of monetary policy, the Bank hinted at a stable interest rate going forward with a potential for rate cuts in order to stimulate economic activity amid downside risks. The monetary policy authority stated: “Despite the uncertainties and risks associated with the external economic context and potential impacts on the national economy still in the recovery phase, the current course of monetary policy remains adequate to achieve the inflation objective.” Moreover, FocusEconomics panelists largely expect the Bank to loosen the financial belt by year-end.

Analysts at the EIU, however, expect the Bank to stand pat in the remainder of this year:

“We expect the BNA […] to maintain this stance throughout 2022, in view of high inflation, which we now expect to average 17% in that year. As inflation moderates in subsequent years the BNA will have scope to ease policy. From 2023 we expect interest-rate cuts to reflect softer price growth, and the policy rate will fall to 13.5% by 2026 as inflation continues to retreat into single digits. Global monetary tightening presents a risk to this forecast, but Angola's shallow capital market limits exposure to capital flight.”

The next monetary policy meeting is scheduled for 29 July.

FocusEconomics panelists project the policy rate to end 2022 at 19.50% and 2023 at 17.33%.

Author:, Economist

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Angola Monetary Policy Chart

Angola Monetary Policy May 2022

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

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