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Angola Holds Interest Rates Amid Cooling Inflation

The Bank of Angola on Tuesday opted to maintain its key interest rate at 19.50% for the fourth consecutive meeting, a decision driven by a continued, albeit gradual, decline in inflation.

While price pressures remain elevated, the central bank acknowledged a discernible slowdown in both monthly and annual inflation rates after peaking in the mid-year.

“Prices for goods and services remain at a high level,” Governor Manuel Tiago Dias acknowledged to reporters, “however, we are observing a deceleration in both monthly and year-on-year inflation following its peak in June and July of this year.”

This decision comes amidst a backdrop of easing inflationary pressures. Angola’s annual inflation rate dipped slightly in December to 27.50%, marking a modest decline from the 28.41% recorded in November.

While acknowledging the challenges posed by persistently high inflation, the central bank remains cautiously optimistic about the country’s economic trajectory. Governor Dias revised upwards the projected economic growth for 2024 to 4.4%, surpassing the previous forecast of 4%. For the year 2025, the central bank anticipates a more moderate growth rate of 3.5%.

This decision underscores the delicate balancing act faced by the Bank of Angola. While maintaining a restrictive monetary policy stance is crucial to combat inflation, the central bank must also consider the potential impact on economic growth.

It’s important to remember that inflation remains a significant concern for Angolan households. The high cost of living continues to erode purchasing power, impacting the daily lives of many citizens. The central bank’s commitment to bringing inflation back within its target range is therefore paramount.

It is expected that the Bank of Angola will closely monitor economic developments, both domestically and internationally. Global factors, such as commodity price fluctuations and the evolving global economic landscape, will undoubtedly influence the bank’s future monetary policy decisions.

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