Wednesday, October 5, 2016

Angola holds BNA rate as August inflation slows slightly

    Angola's central bank left its benchmark BNA rate at 16.0 percent, noting the slowdown in August inflation due to an increase in the supply of food and restrained demand.
    The National Bank of Angola (BNA), which has raised its rate by 500 basis points this year in an effort to curb inflation, encourage savings and reduce the need for foreign exchange, added that it had also taken note of the deceleration in money supply.
    Angola's monthly inflation rate in August eased to 3.30 percent from July's 4.04 percent but on an annual basis it accelerated to 38.18 percent in August from 35.3 percent in July.
    The BNA said the restricted monetary base grew by 1.91 percent in August and while money supply was up by an annual 22.17 percent, in real terms it represented a contraction.
    Angola is suffering from an acute shortage of foreign exchange due to the fall in crude oil prices and the central bank has devalued the kwanza several times in the last year.
    Today the kwanza was trading at 165.7 to the U.S. dollar compared with 135.2 at the start of the year.

    The National Bank of Angola issued the following statement:

"The Monetary Policy Committee of the National Bank of Angola (CPM) met on September 28, 2016, at its fifty-ninth ordinary session.

The CPM analyzed the development of indicators on the national economy with emphasis on the real sectors, Fiscal, Monetary and Foreign as well as the behavior of the international economy. Particular attention was paid to the recent trend in prices in the national economy, and the CPM, noticed an inflation slowdown in August, due on the one hand, the increase in the supply of goods and services, especially food and, on the other hand , the demand restraint.

In August 2016, the monthly inflation rate, measured by the Consumer Price Index in the province of Luanda, published by the National Statistics Institute, was 3.30%, against 4.04% in the previous month. However, given that the inflation rate in August 2016 stood at a still high level when compared to the rate of the same period of 2015, the inflation of the last twelve months stood at 38.18%.
  • Classes "Food and Drinks Alcoholic," "Miscellaneous goods and services" and "health" were the most varied and contributed to inflation in this period;

  • Among the other provinces, the subject of official collection of the general price level, by the National Institute of Statistics, Lunda Norte was the province that registered the highest rate of monthly inflation, 4.67%, and the province of Cunene lowest rate, 2.96%;

  • In the same period, the LUIBOR Overnight went from 13.92% to 13.93% per annum and with maturities of 3 and 12 months the rates stood at 16.28% and 17.87% per year, respectively; 

  • According to preliminary data, in August 2016, credit to the economy increased by 0.58%. On the other hand, the gross credit to the Central Government (titled and not titled) increased 0.61%, while deposits of the Government in the banking system contracted by 5.90%;

  • The Restricted Monetary Base in MN expanded by 1.91%. However, the payment methods represented by the M2 aggregate declined by 1.00% in August 2016. In the past 12 months, the money supply expanded 22.17%, reflecting a contraction in real terms. 

  • In August, commercial banks have acquired foreign exchange of USD 1515.00 million in the foreign exchange market, of which $ 1,320.00 million to BNA and the remainder to its customers, which compared to the previous month, representing a growth of 39 19%;

  • In the primary exchange market, the average exchange rate of the Kwanza against the dollar stood at Kz 165.888, maintaining a certain stability.


The Monetary Policy Committee (MPC), following the analysis of developments in the main macroeconomic indicators, having noted the general trend of deceleration in money supply and the price deceleration outlook on the economy, decided:
  • Maintain Basic Interest Rate - Rate BNA - at 16.00% per annum;
  • Maintain Interest Rate Standing Facility Liquidity Lending at 20.00% per annum;
  • Maintain Interest Rate Standing Facility Liquidity Absorption to seven days at 7.25% per annum;
The next meeting of the Monetary Policy Committee will take place Friday, day 31 October 2016"


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