The consulting firm BMI Research considers that the National Bank of Angola (BNA) should keep the key interest rate at 18% next year, after this month’s rise, with weak economic growth discourage further increases.
“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 today, on the decision of the financial regulator, in which It is argued that “although inflation will remain high in 2024, weak economic growth will deter BNA policymakers from further tightening monetary policy.”
Last week, The BNA raised the interest rate to 18%, previously set at 17%after seven consecutive months of rising inflationdecision contrary to the forecasts of BMI Research, which anticipated a maintaining the rate at 17%.
“We believe that the BNA will maintain the rate at 18% at the next meeting of the monetary policy committee, in January,” says the consultant in the note sent to his clients, recalling the strong depreciation of the kwanza between May and November, from 508 to 837 kwanzas per dollar, due to the decrease in foreign exchange reserves, after the end of the moratorium on debt payments to China.
For BMI research, The BNA should not increase the rate againsince “economic activity has been limited since early 2023 due to the weakness of the hydrocarbon sectoras evidenced by recent price cuts in oil exports due to demand slowdown”.
Real GDP grew by only 0.2% in the second quarter compared to the same period in 2022, and is expected to have recorded a contraction of 0.2% in the third quarter compared to the previous three months, “which which probably increases the concerns of committee members. 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,” the analysts conclude.
The Angolan central bank decided, on Tuesday, to increase the reference interest rate to 18%, previously set at 17%, due to the rising trend of inflation, and plans to continue with a restrictive monetary policy, said the governor of the institution.
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 perspective that this inflationary situation would compromise the objective of reaching an inflation rate of one digit. in the medium term.
Source: TSF
