Angola Monetary Policy May 2023

Angola: Central Bank stands pat in May

On 19 May, the Monetary Policy Committee of the National Bank of Angola (BNA) decided to hold the basic interest rate at 17.00%. It also left the standing liquidity facility rate unchanged at 17.00% and the standing liquidity absorption facility rate at 13.50%. The decision to hold followed two consecutive rate cuts.

Commenting on the decision, the BNA deemed that recent changes in macroeconomic conditions had the potential to influence price stability. Specifically, it highlighted a deterioration in the trade balance, which weighed on the currency—it depreciated 5.8% over the last month. A weaker kwanza is set to lower imports and, thus, exert upward pressure on prices, as domestic production will not fully compensate for the reduction in imports. In order to support the currency and limit short-term inflationary pressures, the BNA decided to hold rates. Moreover, it also put National Treasury Bonds worth USD 350 million on the market to be purchased in kwanzas.

The Bank’s forward guidance remained muted. Our panelists expect the BNA to resume cutting rates by year-end.

The next monetary policy meeting is scheduled for 19 July.

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