"We believe that the National Bank of Angola will maintain the reference interest rate during 2024, after having increased it by 100 basis points in November", reads the comment, to which Lusa had access, regarding the financial regulator's decision , in which it is argued that "although inflation will remain high in 2024, weak economic growth will discourage political decision-makers at the BNA from further tightening monetary policy".
Last week, the BNA raised the interest rate to 18 percent, previously set at 17 percent, after seven consecutive months of rising inflation, a decision contrary to the forecast of BMI Research, which anticipated a maintenance of the rate in the 17 Percent.
"We believe that the BNA will maintain the rate at 18 percent at the next meeting of the monetary policy committee, in January", says the consultant in the note sent to clients, recalling the strong depreciation of the kwanza between May and November, from 508 to 837 kwanzas per dollar, due to the decline in external reserves, following the end of the moratorium on debt payments to China.
For BMI Research, the BNA is unlikely to increase the rate again, as "economic activity has been limited since the beginning of 2023 due to the weakness of the hydrocarbon sector, evidenced by recent price cuts in oil exports due to the slowdown of demand."
Real GDP grew just 0.2 percent in the second quarter compared to the same period in 2022, and is expected to have registered a contraction of 0.2 percent in the third quarter compared to the previous three months, "which probably increases members' concerns of the committee" that defines monetary policy in Mozambique.
"Trying to strike a balance between controlling inflation and stimulating economic activity, we believe that the BNA will decide to maintain the rate in January", conclude the analysts.
The central bank decided on Tuesday to increase the reference interest rate to 18 percent due to the rising trend of inflation, and plans to continue with a restrictive monetary policy, said the institution's governor.
Manuel Tiago Dias spoke to the press after the meeting of the Monetary Policy Committee (CPM) of the National Bank of Angola and explained that the decision was due to the prospect that this inflationary situation would compromise the objective of achieving an inflation rate of one digit in the medium term.