BNA leaves rates unchanged in September

Bank unexpectedly holds in September: At its meeting on 18–19 September, the Monetary Policy Committee of the National Bank of Angola (BNA) decided to leave the key interest rate unchanged at 19.50%. The decision mirrored July’s hold and surprised markets, who had expected a hike. Meanwhile, the Bank left the standing liquidity facility rate at 20.50% and the standing absorption facility rate at 18.50%.

High inflation pushes hold: The BNA determined that it had to hold in order to consolidate the downtrend in inflation: Price pressures eased slightly in August, tamed by ongoing control of circulating liquidity and an improvement in the supply of essential consumer goods. That said, they remained entrenched above the Bank’s 23.0% end-of-year target due to the phasing out of fuel subsidies and the kwanza’s recent depreciation, likely dissuading a cut. Moreover, the BNA noted that high-frequency indicators signaled robust activity in the non-oil sector, giving it scope to keep interest rates elevated.

Majority of panelists expect hikes ahead: In its communiqué, the BNA did not provide explicit forward guidance. Most of our panelists have penciled in between 50–150 basis points of additional hikes by year-end, though a minority expect the Bank to hold. A weaker-than-expected currency is an upside risk. The Bank will reconvene on 18–19 November.

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