"In sharp contrast to the rest of the world, we expect the Angolan central bank to cut the benchmark interest rate in 2022, as inflation is slowing from current high levels, but only by around 150 basis points." , to maintain a slightly positive real rate, as recommended by the International Monetary Fund (IMF)", reads a comment on monetary policy.
Commenting on the decision of the National Bank of Angola to keep the interest rate at 20 percent at its last meeting, Oxford Economics Africa writes that "the appreciation of the average exchange rate of the kwanza and softer global food prices from the second semester will help the inflation rate to slow down to an average of 19.9 percent in 2022, compared to 25.8 percent in 2021".
While acknowledging that the "risks are sloping upwards due to the uncertain impact of the war on global commodity prices", analysts say that "the BNA's objective is to bring inflation down to single digits in the medium term, with minimal intervention from the market".
The consultant's forecast comes in a context of the recovery of the kwanza, which has gained 23 percent against the dollar since January, and is almost 40 percent stronger than it was a year ago.
"The appreciation of the currency will help to slow down the increase in consumer prices, due to Angola's strong dependence on imported goods", conclude the analysts.
The National Bank of Angola announced on 31 March that it had decided to keep the reference interest rate at 20 percent, although admitting that inflation is more favourable, but arguing with the "risks and uncertainties" of the situation.
"Despite the more favorable behavior of the inflation rate in the country, risks and uncertainties associated with the internal and external economic context prevail, recommending prudence and stability in the conduct of monetary policy", reads the note released at the end of the Monetary Policy Committee (CPM) meeting.
"The CPM decided to keep the base interest rate (BNA Rate) at 20 percent, the interest rate of the Permanent Liquidity Lending Facility at 25 percent, the interest rate of the Permanent Liquidity Absorption Facility at 15 percent ; and the mandatory reserve ratios at 22 percent," the statement said.
In addition, the CPM "decided to relax the foreign exchange position limit of commercial banks, changing it from 5 to 10 percent".
