Angola Raises Key Rate to Record-High 18% on Inflation Concerns

LUANDA (Capital Markets in Africa) – Angola’s central bank raised its benchmark interest rate to a record 18 percent as it seeks to counter inflation and support the kwanza.

The key rate was increased from 16 percent, Luanda-based Banco Nacional de Angola said on Thursday after a meeting of the monetary policy committee.

“The bank paid particular attention to the evolution of prices in the economy, having observed an acceleration in inflation,” the MPC said in a statement on its website.

While inflation has slowed from a record high of 42 percent a year ago, consumer-price growth in the province of Luanda of 29 percent in November is still more than three times the monthly average in the four years through 2015. A higher benchmark rate may help support the kwanza, minimizing the need for another devaluation.

The currency has weakened almost 20 percent against the dollar since the previous devaluation at the end of 2015. Sub-Saharan Africa’s second-biggest oil producer, which relies on crude exports for much of its revenue, is struggling with a shortage of foreign exchange after a slump in international prices.

Lower inflation and “more flexible” exchange rates are important steps toward diversifying the economy, Diogenes de Oliveira, chairman of the economy and finance commission in parliament, said last month.

Angola’s new president, Joao Lourenco, named Jose de Lima Massano governor in October as he replaced officials that his predecessor Jose Eduardo dos Santos appointed. Massano served as head of the central bank for five years until January 2015 and is the nation’s third governor in less than three years.

Source: Bloomberg Business News