Central Bank stands pat on flaring global geopolitical tensions

Monetary easing cycle paused in March: On 11–12 March, the National Bank of Angola (BNA) opted to pause its monetary easing cycle following three consecutive cuts, keeping the BNA basic reference rate at 17.50—its lowest level since November 2023. The hold matched market expectations.

Middle East conflict calls for caution: The BNA opted for prudence, as rising global geopolitical tensions—notably the conflict in the Middle East and its potential effects on inflation across the globe—threaten the Angolan economy. While higher oil prices will benefit the continent’s third-largest crude producer, the rising cost of refined fuel will likely spark inflation due to the nation’s reliance on imported fuel. Accordingly, the BNA refrained from additional easing to avoid further fueling inflation.

Further easing still on the table for now: The BNA provided no guidance regarding future decisions, but our Consensus is for interest rates to fall from current levels by the end of this year. Inflation is seen continuing its downtrend, potentially providing room for further easing to support economic momentum. That said, the size of the reduction will likely be smaller than previously anticipated, as the U.S.-Iran conflict should fuel price pressures, constraining the BNA’s capacity to reduce interest rates. The Central Bank will reconvene on 13–14 May.

Panelist insight: On the outlook, analysts at Emerging Market Watch noted: “Oil prices, fx inflows and food price dynamics will remain key determinants of whether the central bank resumes easing later in 2026. At first glance, the recent spike in oil prices is positive for Angola as it implies stronger-than-expected export and budget revenues and more comfortable funding for debt repayments, though over time it could still feed into higher import prices and inflation risks.”

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