Angola's central bank cut its basic interest rate, the BNA rate, by 50 basis points to 8.75 percent to stimulate further credit to the economy as it expects the downward trend in inflation to continue.
It is the first rate cut by the National Bank of Angola (BNA) since November 2013 and the central bank also reduced the rate on its standing lending facility by 25 basis points to 9.75 percent while the rate for absorbing liquidity was maintained at 1.75 percent.
In May the BNA raised the liquidity absorption rate for the second time this year for a total increase of 50 basis points while it cut the lending facility rate by 25 points.
Angola's inflation rate eased to 6.89 percent in June, continuing its decline since October 2010 when it topped 16 percent. Since August 2012 inflation has been below 10 percent, a long-standing aim of the central bank.
Earlier this month the International Monetary Fund (IMF) forecast that Angola's inflation rate would rise to 7.5 percent by the end of the year due to the one-off effects on new tariffs on imports before continuing the downtrend through 2015 and beyond.
The growth of Angola's economy is expected to ease to 3.9 percent this year as the expansion in agriculture slows from last year and due to a temporary drop in oil production in the first half.
For 2015 growth is forecast by the IMF to accelerate to 5.9 percent as oil production recovers and non-oil economic activity remains robust.
Angola's government has targeted economic growth this year of 5 to 7 percent after 7.4 percent growth last year, up from 5.2 percent in 2012.
Credit to the economy rose to 3.153 billion kwanza in June, an annual increase of 14.56 percent while commercial banks acquired currency worth US$ 3.869 billion, including $2.680 at the BNA, an increase of 58 percent from the previous month, the central bank said.
In the first six months of the year, total sales in the foreign exchange market rose 36 percent to $16.54 billion and the average exchange rate of the kwanza in June was 97.82 per dollar, an appreciation of 0.08 percent from May.