"With regard to our outlook for the near future, despite a slight increase in monthly inflation, year-on-year inflation continued to decline and our estimate indicates that it will end the year between 14 and 15 percent. there is still room for monetary policy flexibility that the National Bank of Angola (BNA) can take advantage of", reads a comment on the evolution of interest rates in the country.
"The latest inflation data of 18.16 percent confirms the trend that we estimate for September, and for October our expectation is that year-on-year inflation will be between 16 and 16.80 percent", say the analysts, who estimate that in 2023 there will be "a slight acceleration of monthly inflation values compared to the second half of 2022, which could cause year-on-year inflation to stop falling somewhere between the first and second quarters of the year, and may even accelerate a little again, to levels around or above 15 percent".
The reason, add the analysts, "is related to a gradual but real depreciation of the kwanza, which will occur due to the decrease in oil production and in the price of this raw material internationally".
Thus, the National Bank of Angola, even having room to lower interest rates again, contrary to what has been the practice in other central banks worldwide, will have to "be very cautious", and therefore "it is not completely certain that the next monetary policy easing takes place as early as November, although this is not to be ruled out".
Regardless of monetary policy decisions in the coming months, the BFA research office believes that inflation should even fall to less than 10 percent in the medium term.
"In our opinion, with the continued good management of monetary policy by the BNA, the path to single-digit inflation may be delayed, but it will not be reversed", they conclude.
The National Bank of Angola's official estimate for inflation this year is 18 percent, but the deputy governor of the central bank, at a conference in Lisbon in October, said the figure should be "quite below".