Angola: Central Bank holds fire in July
Latest bank decision: At its meeting on 18–19 July, the Monetary Policy Committee of the National Bank of Angola (BNA) decided to leave the key interest rate unchanged at 19.50%. The move came on the heels of two consecutive hikes and surprised markets on the downside. Meanwhile, the Bank left the standing liquidity facility rate at 20.50% and the standing absorption facility rate at 18.50%.
Monetary policy drivers: The hold was primarily influenced by the Bank’s expectation that inflation will slow in the coming months thanks to its ongoing control of circulating liquidity and an improvement in the supply of essential consumer goods. The BNA noted that monthly inflation slowed to 2.07% in June from 2.49% in May, largely due to slower price pressures for food and non-alcoholic beverages, a category that had been fueling price growth.
Policy outlook: In its communiqué, the BNA did not provide specific forward guidance. Our Consensus is for 50 basis points of additional hikes by year-end, though some of our panelists have penciled in cuts for this year.
The next monetary policy meeting is scheduled for 19–20 September.
Panelist insight: Analysts at the EIU commented:
“The BNA has raised the policy rate by 250 basis points to 19.5% since the beginning of the monetary tightening cycle in November 2023. However, the tightening remains inadequate to stave off inflationary pressures. Accordingly, we expect a cumulative 150-basis-point increase by end-2024, to 21%, to counter persistently high inflation due to ongoing diesel subsidies removal and foreign-currency shortages. In order to avoid slowing credit growth (which is currently growing sharply following a period of contraction), we expect the authorities to raise the policy rate only gradually.”