Central Bank stands pat in May

Policymakers deliver sixth straight hold: At its meeting on 20–21 May, the Monetary Policy Committee of the National Bank of Angola (BNA) decided to maintain the BNA Rate at 19.50%. This was the sixth consecutive hold since July 2024, with rates remaining at some of the highest levels in recent years. Meanwhile, the Bank cut the mandatory reserve ratio from 20.00% to 19.00% to increase liquidity in the Angolan financial system.

Sticky price pressures and inflationary risks drive decision: The BNA once again prioritized taming stubborn price pressures. Inflation has trended down since H2 2024, tempered by improved consumer goods supply and, more recently, renewed stability in the kwanza. Still, inflation remains far above both pre-Covid standards and its regional peers. In addition, the Bank pointed to a recent slump in oil prices due to weaker global demand, which could weigh on the kwanza, posing an upside risk to inflation. That said, a recent downgrade in the IMF’s global GDP growth forecasts likely dissuaded the Bank from tightening its stance further so as to avoid further strain on the domestic economy.

Easing cycle clouded by rising trade uncertainty: The BNA’s communiqué lacked specific forward guidance. Most of our panel forecast rate cuts by December, with only a minority seeing the Bank holding fire. Still, the spread on the end-year rate remains wide at 17.00–19.50% amid rising global trade barriers; weaker-than-expected oil prices are an upside risk to rates due to their impact on the exchange rate and inflation. The Bank will reconvene on 17–18 June.

Panelist insight: Analysts at the EIU commented: “We expect the Banco Nacional de Angola (the Central Bank) to keep the policy rate at 19.5% in 2025-26, with a possibility that the rate will be increased (to tame inflation) as the real interest rate is deeply negative. The authorities lack a credible inflation target, which means that monetary policy has to be more aggressive than it otherwise would be, and the central Bank has preferred to support private-sector credit growth, which has been robust.”

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