In a note sent to customers, to which Lusa had access, BFA's economic studies office highlights that the increase in prices in August was not solely due to seasonal factors, pointing to the variation in food prices, predicting that the path of monthly inflation and counterpart will continue to rise in the coming months.
At the last meeting of the Monetary Policy Committee (CPM), held on September 15th, the National Bank of Angola (BNA) decided to keep key interest rates unchanged, attributing the price variation to seasonal factors and insufficient supply of goods and services.
Annual inflation accelerated in August to 13.53 percent, for the fourth consecutive time, reaching levels close to the December 2022 highs (13.86 percent), while monthly inflation reached 2.04 percent, the highest level high since December 2021.
"We believe that annual inflation will end the year at around 20 percent or above if there is no recovery in the kwanza and also a strong tightening of monetary policy, taking into account that with the current data relating to the money market, the BNA has stopped making the monetary policy", states the BNA note.
Analysts predict that inflation could be above the short-term target defined by the BNA, between 12-14 percent, in September, influenced by the lack of an inversion in the exchange rate.
"Thus, we hope that other measures to restrict monetary policy will be used, such as, for example, the adjustment in the mandatory reserve ratios and the continued tightening of the use of permanent liquidity facilities", they add.
"Observing the inflationary pressures of recent months, we believe that the BNA should use other monetary policy instruments since the key interest rates are already high. On the exchange rate side, in a scenario in which there is no reversal of its movement , monetary policy is expected to become "tighter" again, according to BFA economists.
The foreign exchange market did not show significant variations, as the exchange rate has been around 825 kwanzas per dollar since mid-July, after the Angolan currency depreciated by more than 45 percent last semester.
"In general, we believe that the BNA has not changed the instruments for conducting monetary policy as it is still evaluating the effects of past measures in order to maintain balance in the money market", but if inflation continues to rise, "the BNA should intervene more strongly in order to restrict liquidity again", argue the analysts.