Uzbekistan maintains rate to ensure inflation slows

    Uzbekistan's central bank kept its base rate steady at 14.0 percent, unchanged since September last year, saying this was to support the economic recovery and maintain the slowing dynamics of inflation and inflation expectations against the backdrop of the risk of rising global food prices.
     The Central Bank of the Republic of Uzbekistan (CBU) lowered its base rate twice last year (April and September) by a total of 200 basis points to support economic activity during the COVID-19 pandemic and since then inflation has trended lower, from over 14 percent mid-2020 to 10.9 percent in March.

     However, CBU noted food prices in March rose an annual 13.8 percent, and carries a 5.8 percentage point impact on the headline rate, while the cost of non-food products and services rose 8.8 percent and 8.4 percent, respectively, while core inflation was 11.6 percent, showing a persistence of inflationary risks.
     And while 12-month inflationary expectations have trended lower and are now 15.5 percent for the general population and 15.9 percent by businesses, CBU said they remain higher than actual inflation.
     CBU maintained its forecast for inflation to end this year between 9.0 and 10.0 percent.
     At the start of 2020, the central bank began transitioning to an inflation targeting regime, with the aim of lowering inflation to 10 percent in 2021 and then 5 percent in 2023.

     Economic activity in the former Soviet republic continued to recover in February and March after declining in January, with gross domestic product in the first quarter expanding an annual 3.0 percent, as industrial output rose 3.8 percent, agriculture by 3.1 percent, services by 5.8 percent and construction by 0.5 percent and retail turnover by 2.8 percent, the bank said.

     The improvement in the global economy is also boosting exports from Uzbekistan, with exports, excluding gold and gas, up 25 percent from last year with exports of textiles up 38 percent, chemical products up 21 percent and non-ferrous metals up 58 percent.

     CBU forecast real GDP growth this year of 4.5 to 5.5 percent, adding based on the first quarter, growth will be close to the upper limit of this forecast. In 2020 Uzbekistan's economy grew 1.6 percent.

    www.CentralBankNews.info

     

     

Canada keeps rate but trims QE as outlook improves

     Canada's central bank left it key interest rate steady for the 9th time but will scale back its asset purchases, as signaled last month, as it becomes the first developed market central bank to roll back the extraordinary level of monetary stimulus in response to the global economic recovery from the COVID-19 pandemic.

     The Bank of Canada (BOC) kept its target for the overnight rate at 0.25 percent, unchanged since March 27, 2020 when it was cut for the third time that month to what the bank considers the effective lower bound.

     It also left the bank rate at 0.50 percent and the deposit rate at 0.25 percent.

     "The outlook has improved for both the global and Canadian economies," BOC said, adding economic activity has proved more resilient than expected in the face of the pandemic and the rollout of vaccines.

     In addition to trimming its weekly purchases of government bonds to $3 billion from $4 billion, BOC raised its forecast for economic growth and inflation, and pulled forward its date for when it may raise its interest rate.

     "We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved," BOC said, reiterating its previous guidance, but then adding:

     "Based on the Bank's latest projection, this is now expected to happen some time in the second half of 2022," a change from the January projection that saw this happening in 2023.

     BOC was very aggressive in easing its monetary policy stance last year in response to the pandemic.

     The bank not only slashed its key interest rate three times in the month of March by a total of 150 basis points to what it saw as the effective lower bound of 0.25 percent, but also embarked on asset purchases of both commercial paper and government bonds to ensure financial markets continued to operate.

     Initially, BOC began buying C$5 billion of government securities a week and then in the following month of April last year the bank expanded the program to include up to $50 billion of bonds from the country's provinces and up to $10 billion in corporate bonds.

     In October last year BOC's weekly bond purchases were trimmed to $4 billion as part of a shift toward buying more longer-term bonds that have a more direct impact on borrowing rates.
    The result of last year's asset purchases and repurchase operations was BOC's balance sheet ballooned four times its pre-pandemic size to about $575 billion in February.

     But in a key speech last month by BOC Deputy Governor Toni Gravelle about the bank's move to discontinue some of its crises programs - foreshadowing today's move - he said some of the shorter-term debt bought by the bank had already matured and by the end of April the balance sheet will have shrunk to about $475 billion.

     Although Canada has weathered the economic storm from the pandemic better than expected, the bank said a number of regions were experiencing a third wave of infections and lockdowns, injecting a new dimension of uncertainty, and the recovery remains highly dependent on the virus and vaccinations.

    "Even as economic prospects improve, the Governing Council judges that there is still considerable excess capacity, and the recovery continues to require extraordinary monetary policy support," BOC said.

    Decisions about further changes to the bank's purchases of assets - known as quantitative easing (QE) - will be guided by how the recovery proceeds and the bank said it would continue with QE to keep interest rates low across the yield curve and to provide "the appropriate degree of monetary stimulus to support the recovery and achieve the inflation objective."

     After shrinking in the first and second quarters of 2020, Canada's economy has bounced back, with gross domestic product growing 8.9 percent in the third quarter from the second quarter and then 2.3 percent in the fourth quarter of last year for an annual contraction of 3.2 percent, up from 5.3 percent in the third quarter and 12.7 percent in the second quarter of 2020.

      Growth in the first quarter of this year appears "considerably stronger" than the bank forecast in January and it now expects slack in the economy to be absorbed and inflation to sustainably return to its target of 2.0 percent, within a control range of 1-3 percent, in the second half of 2022.

     BOC raised its forecast for growth this year to 6.5 percent, up from January's forecast of 4 percent and a 2.5 percent contraction in 2020. 

     For 2022 the economy is seen expanding around 3.75 percent, down from its earlier forecast of 5 percent, and then 3.25 percent in 2023, up from 2.5 percent.

     Earlier today there was further proof of Canada's recovery from the pandemic, with Statistics Canada saying the annual inflation rate rose to 2.2 percent from 1.1 percent in February, continuing the steady rise since June 2020 when consumer prices rose after deflation set in during April and May.

    Over the next few months, inflation is expected to rise temporarily to the top of the bank's control range, mainly due to base effects, but then return to 2 percent in the second half of next year.

     Inflation is forecast to rise to 2.2 percent in the fourth quarter of this year, up from January's forecast of 1.5 percent but down from 2.9 percent in the second quarter, and then ease to 2.0 percent a year later before rising to 2.4 percent in the fourth quarter of 2023, up from 2.1 percent.
     Canada's labor market has been strengthening faster than expected, with the economy in March adding three times the number of jobs as expected, pushing down the unemployment rate to 7.5 percent that month from 8.2 percent in February and down from a pandemic high of 13.7 percent in May 2020.

     BOC also revised upward its estimate of the country's potential output due to the country's greater resilience to the pandemic and accelerated digitalization though it remains 1 percent below pre-pandemic estimates.

     Global potential output is forecast to recovery to 3.0 percent in 2022 and 2023, up from 2.7 percent this yea and 2.3 percent in 2020 as the impact of the pandemic fades, and Canada's potential output is forecast to rebound to 1.6 percent in 2022 from an earlier forecast of 1.5 percent - including the temporary effects of the pandemic - and 2.0 percent in 2023.

     The yield on Canada's benchmark 10-year government bond has also recovered steadily since hitting a low of around 0.40 percent in August last year to trade around 1.5 percent in the last month.

     The Canadian dollar reacted strongly to the BOC's move, jumping some 1.3 percent to 1.248 to the U.S. dollar, continuing its steady rise since almost hitting records low of 1.45 against the U.S. dollar in March last year to be up over 2 percent this year.

This week in monetary policy: Israel, China, Indonesia, Canada, Costa Rica, Uzbekistan, ECB, Paraguay & Russia

     This week - April 19 through April 24 - central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Israel, China, Indonesia, Canada, Costa Rica, Uzbekistan, European Central Bank, Paraguay and Russia.

     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.

WEEK 16
APR 19 - APR 24, 2021:
ISRAEL	19-Apr	0.10%	16:00	0	0	0.10%	DM
CHINA	20-Apr	3.85%	9:30	0	0	3.85%	EM
INDONESIA	20-Apr	3.50%		0	-25	4.50%	EM
CANADA	21-Apr	0.25%	10:00	0	0	0.25%	DM
COSTA RICA	21-Apr	0.75%		0	0	1.25%
UZBEKISTAN	22-Apr	14.00%	14:30	0	0	15.00%
EURO AREA	22-Apr	0.00%	13:45	0	0	0.00%	DM
PARAGUAY	22-Apr	0.75%		0	0	1.25%
RUSSIA	23-Apr	4.50%	13:30	25	25	5.50%	EM

 
    www.CentralBankNews.info

Congo cuts rate 2nd time, inflation slows, franc stable

     The central bank of the Democratic Republic of Congo lowered its monetary policy rate for the second consecutive month, saying it was easing funding conditions in light of a slowdown in inflation, a stable foreign exchange market and favorable prospects for the short term that don't point to any major shocks.

     The Central Bank of Congo (BCC) cut its policy rate by another 500 basis points to 10.5 percent, according to a statement from the bank's monetary policy committee published on twitter by an advisor to the bank's governor.

      BCC has now cut its key interest rate by 800 basis points this year following a 300 point cut on March 12.

     The two rate cuts partly reverse a sharp 1,100 basis point rate hike in August last year aimed at re-anchoring inflation expectations after the Congolese franc plunged, pushing up import prices and inflation, due to falling global demand for metals and raw materials amid the COVID-19 pandemic.

     Prior to the August hike, which came at an unscheduled meeting of the bank's policy committee, the rate had been cut by 150 basis points in March to 7.50 percent to cushion the country's economy from the impact of the pandemic.

     In early March last year the franc began to weaken and then fell sharply - some 12 percent against the U.S. dollar - from early May to early August. 

     Since then the franc has stabilized but still bounced off lows around 2,000 to the dollar last month and was trading at 1,972 to the U.S. dollar today, down 14 percent this year.

     The central bank said the foreign exchange market was stable with the franc depreciating 0.1 percent in the last month. 

     After jumping to 31.42 percent in July 2020 from 7.54 percent at the start of 2020, inflation in Congo has fallen rapidly to 6.23 percent in January this year from 22.02 percent in November last year.

     Despite the hit to global economic activity from the pandemic, Congo's economy expanded by 1.7 percent last year, BCC said, due to a rebound in the demand for its main exports, copper and cobalt.

      Surveys of business leaders show rising confidence about the economy in the short run and the International Monetary Fund forecasts 3.8 percent growth this year and inflation of 10.9 percent.

     www.CentralBankNews.info

Ukraine raises rate 2nd time to bring inflation to target

      Ukraine's central bank lived up to its guidance and raised its rate for the second consecutive month and while it expects to keep its rate steady for the rest of the year, it also warned that it is ready to raise the rate further if inflationary pressures and expectations worsen.
     The National Bank of Ukraine (NBU) raised its key policy rate by another 100 basis points to 7.50 percent and has now raised it by 150 points this year as it seeks to gradually slow inflation in the second half of this year and return it to its target in the first half of 2022.
     Today's rate hike comes after the central bank in March raised its rate for the first time since September 2018 and said it was ready to raise the rate further to curb inflationary pressures and bring inflation back to target.

     The rate hikes extends the central bank's unwinding of a 2-year easing cycle that began in April 2019 until June 2020 during which the rate was lowered 9 times and by a total of 12 percentage points as it brought inflation - which had risen to over 16 percent in September 2017 - under control.
     But after inflation settled around 2 percent from February 2020 to September, it began accelerating in October last year and rose faster than NBU had expected to 8.5 percent in March this year, well in excess of the bank's target of 5.0 percent, plus/minus 1 percentage point.
     The bank's board said its current forecast envisages the policy rate will remain at 7.50 percent until the end of this year and this should be enough to bring inflation back to its target in the first half of 2022.
     "However, if underlying inflationary pressures rise more noticeably that currently expected, and if inflation expectations worsen, there could be the need for further monetary policy tightening," the bank said, adding it is ready to raise the policy rate to a level that brings inflation back to its target in the first half of next year.

      The steep rise in inflation is mainly due to a rise in global prices for food and energy, the comparison with last year's low prices during the COVID-19 crises, along with a rise in consumer demand that has been fueled by higher wages.

     "Inflation expectations remain high on the back of the rapid growth in the prices of goods consumed every day," NBU said, revising upward its forecast for inflation to average 8 percent this year from 7 percent.

     Inflation is expected to peak in the third quarter of this year and gradually reverse as the effect of a low comparison base wanes, new harvest supplies hit the market and interest rates rise.

     "Inflation will start to decelerate in the autumn, return to its target range in H1 2022 and subsequently remain there," the central bank said.

     After shrinking in the second quarter of last year, Ukraine's economy bounced back in the third quarter but after almost reaching pre-COVID levels in the fourth quarter, it slowed after the imposition of new quarantine measures and is expected to contract on an annual basis in the first quarter of 2021.

      As a result, the central bank lowered its forecast for 2021 growth to 3.8 percent from an earlier 4.2 percent, with the economy expected to return to growth in the second quarter and then grow at a pace of around 4.0 percent in 2022 and 2023.

      A detailed economic forecast will be published by NBU on April 22.

Turkey holds rate but softens hawkish policy stance

      Turkey's central bank maintained its key interest rate and "tight monetary policy stance," as widely expected, but dropped its earlier commitment of maintaining this stance for an extended period and that it could even raise rates further, signaling a clear softening of its hawkish tone.
      Instead of its previous pledge of keeping a tight policy stance "decisively" and for an extended period, the Central Bank of the Republic of Turkey (CBRT) today said it would use "decisively" all instruments in pursuit of price stability and the policy rate would be set above inflation to maintain a disinflationary effect until there is a permanent fall in inflation and the medium-term inflation target is reached.
     The shift in tone comes after a highly anticipated first monetary policy meeting under its new governor - the bank's fifth in the last decade - and the verdict by the foreign exchange market was swift.
     The Turkish lira immediately fell just over 1 percent to 8.133 to the U.S. dollar, before recovering some of its loss to 8.09 but continuing the slide since March 21 when current governor Sahap Kavcioglu took over after his predecessor, Naci Agbal was fired by Turkey's strong-will president, Tayyip Erdogan.   

     Agbal was the third governor to be let go by Erdogan since Murat Cetinkaya was fired in 2019 and Murat Uysal was fired in 2020, repeatedly unsettling investors who increasingly doubt the central bank's commitment to fight inflation under the leadership of Erdogan.

    Turkey's inflation rate has been volatile in the last few years, mainly due to the impact of the lira's exchange rate.

     After plunging from over 100 percent in January 1998 to below 8 percent in 2005, inflation in Turkey was relatively contained below 10 percent for more than a decade when the lira's decline was relatively steady.

    But in early 2018 the lira's decline picked up speed and then plunged in July and August that year, a move Cetinkaya responded to by raising interest rates sharply, helping reverse some of the lira's losses, while inflation spiked to 25.24 percent in October 2018.

     Inflation remained close to 20 percent for the next six months but the impact of the high interest rates and a relatively steady lira helped push down inflation to 8.55 percent in October 2019.

     But the arrival of COVID-19 last year undermined the lira's stability and it lost almost 20 percent of its value in 2020 though its fortunes appeared to have changed in November last year with the arrival of Agbal at the central bank who quickly raised rates, helping boost the lira and the confidence of investors.

     But this peace was shattered in March when Erdogan fired Agbal after his third rate hike - the bank's fourth since September 2020 - and since this change of governor the lira has lost over 10 percent to trade at 8.09 to the dollar today, down 8.8 percent since the start of 2021 and down 26 percent since the start of 2020.

     Inflation, meanwhile, has continued to rise for the last five months to 16.19 percent in March, more than 3 times the central bank's medium-term target of 5.0 percent.

      CBRT left its one-week repo rate at 19.0 percent.

Belarus raises rate 1st time in 6 years as inflation rises

      The central bank of Belarus raised its benchmark interest rate for the first time in more than 6 years to limit what is said was "pro-inflationary risks" and strengthen its control over money supply as it seeks to pull back rising inflationary expectations.
     The National Bank of the Republic of Belarus (NBRB) raised its refinancing rate by 75 basis points to 8.50 percent, its first rate hike since January 2015 that comes after the bank's board last month tightened its control over liquidity and the expansion of its monetary base to limit inflation.
     In addition to the refi rate, the central bank also raised the overnight loan rate to 9.5 percent and the overnight deposit rate to 7.50 percent.

     Today's rate hike punctuates a monetary easing cycle under way since April 2016, which comprised 19 cuts to the refi rate by a total of 17.25 percentage points, including three cuts last year by 1.25 percentage points.
     Belarus has a history of rampant inflation which hit an annual 110 percent in January 2012 when the central bank's refi rate was 45 percent. From that level, inflation declined and in February 2012 the central bank began lowering its refi rate and cut it more than in half by August 2014.
     After an uptick in inflation in 2015, NBRB reversed course and raised its rate but then returned to the easing path in April 2016 as inflation continued its steady decline.

      But since August 2020 inflation in Belarus has accelerated, pushed up by the one-two punch of a fall in the Belarus ruble in March following the global COVID-19 crises and then political unrest following a contested presidential election in August 2020.

     "At the end of 2020, inflationary processes accelerated, which was due to the transfer of the depreciation of the Belarusian ruble to prices, as well as supply shocks in the markets of certain food products," NBRB said.

     After tumbling 18 percent against the U.S. dollar in February through late March last year, the ruble bounced back, like most other currencies.
      But after widespread protests broke out following the re-election of Alexander Lukashenko, who has ruled the former Soviet republic since 1994, the ruble again fell and has remained weak since then as demand for fresh elections continue and neither the United States nor the European Union have recognized Lukashenko as the country's legitimate leader.
      Today the ruble was trading at 2.61 to the U.S. dollar, down 0.8 percent this year and while it is up 2.7 percent since a record low of 2.68 in early September 2020, it is still almost 20 percent below its level at the start of 2020.

     While today's rate hike was hardly unexpected following last month's initial move to limit inflation, the timing of the board's decision was a surprise as the bank last month also canceled scheduled board meetings in favor of taking decisions when necessary.

      Although inflation in Belarus eased to 8.5 percent in March from 8.7 percent in February, it remains well above the central bank's target of 5.0 percent and the bank said surveys show inflation expectations have risen against the backdrop of rising inflation and its prolonged deviation from its target.

      In addition to the rise in food prices worldwide and higher prices for imported non-food products, domestic prices are also under upward pressure from changes to taxes.

      Easy monetary policy worldwide is also expected to boost inflation worldwide and the central bank said inflation in its main trading partner of Russia is first expected to return to its target in the first half of 2022.

      "Taken together, these factors form the preconditions for maintaining high inflationary expectations of economic agents for a long time, which increases the risk of continued high inflation in the future," the central bank said.

      Although weak domestic demand should lower the rise in consumer prices starting in the second quarter of this year, NBRB first expects inflation to decline by the end of this year to around 7 percent in December and then continue to ease to close to its 5.0 percent target from the second quarter of 2022.

UPDATE-This week in monetary policy: Serbia, New Zealand, Singapore, Uganda, Namibia, South Korea, Turkey and Ukraine

     (Following item updated with Monetary Authority of Singapore)    

    This week - April 12 through April 17 - central banks from 8 countries or jurisdictions are scheduled to decide on monetary policy: Serbia, New Zealand, Singapore, Uganda, Namibia, South Korea, Turkey and Ukraine.

     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.

WEEK 15
APR 12- APR 17, 2021:
SERBIA	13-Apr	1.00%	12:00	0	0	1.50%	FM
NEW ZEALAND	14-Apr	0.25%	14:00	0	0	0.25%	DM
SINGAPORE	14-Apr	N/A	8:00	0	0	N/A	DM
UGANDA	14-Apr	7.00%		0	0	8.00%
NAMIBIA	14-Apr	3.75%		0	0	4.25%
SOUTH KOREA	15-Apr	0.50%		0	0	0.75%	EM
TURKEY	15-Apr	19.00%	14:00	200	200	8.75%	EM
UKRAINE	15-Apr	6.50%	14:00	50	50	8.00%	FM

    www.CentralBankNews.info

This week in monetary policy: Australia, India, Poland, Sri Lanka and Peru

    This week - April 5 through April 11 - central banks from 5 countries or jurisdictions are scheduled to decide on monetary policy: Australia, India, Poland, Sri Lanka and Peru.

     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.

WEEK 14
APR 5- APR 11, 2021:
AUSTRALIA	6-Apr	0.10%	14:30	0	0	0.25%	DM
INDIA	7-Apr	4.00%		0	0	4.40%	EM
POLAND	7-Apr	0.10%		0	0	0.50%	EM
SRI LANKA	8-Apr	4.50%	7:30	0	0	6.00%	FM
PERU	8-Apr	0.25%		0	0	0.25%	EM

 
    www.CentralBankNews.info

Jamaica holds rate, to keep stance till econ pre-Covid

     Jamaica's central bank maintained its main interest rate and accommodative monetary policy stance to support a "speedy economic recovery" and said it intends to "maintain this monetary policy stance until there are clear signs that economic activity in Jamaica is returning to pre-COVID-19 levels."
     The Bank of Jamaica (BOJ) left its policy interest rate - the overnight deposit rate - at 0.50 percent, unchanged since it was cut in August 2019 by 25 basis points.

     The rate cut in August 2019 was the culmination of 12 rate cuts with BOJ lowering the key rate by a total of 3.25 percentage points starting in July 2017 when the central bank adopted a new monetary policy framework.

     The bank's guidance that it will maintain its policy stance until there are clear signs that economic activity is recovering is new.

     In February, when it released its quarterly monetary policy report, Governor Richard Byles said the outlook suggested the economy may be past the worst and BOJ would remain focused on ensuring that inflation remains within its target range and it would deploy additional measures, as needed, to ensure the continued smooth flow of liquidity to the financial system.

     BOJ has kept its policy rate at the current level based on the assessment that inflation will generally remain within its target of 4.0 to 6.0 percent over the next two years and today said it currents assessment is in line with its projections from February.
     Inflation in Jamaica eased to 3.7 percent in February from 4.7 percent in January - largely due to lower vegetable prices - and BOJ forecasts inflation will average around 5.0 percent over the next two years and mainly stay within the target range.
     "Bank of Jamaica remains committed to ensuring that inflation remains low and stable, within its target, and at the same time, is prepared to take all necessary actions to ensure that Jamaica's financial system remains sound," the bank said.

     In February, BOJ forecast inflation in the March quarter would be 4.0 to 6.0 percent, then 4.0 to 5.0 percent in the June quarter and 4.5 to 5.5 percent in the September quarter.

     The coronavirus pandemic hit Jamaica's main foreign currency earner tourism hard and BOJ reiterated the island's economy would contract 10.0 to 12.0 percent in the 2020/21 financial year that ends April 1.

     "The economic outlook for Jamaica remains uncertain in the context of the ongoing COVID-19 pandemic but BOJ remains cautiously optimistic, particularly in light of the commencement of the domestic vaccination programme against the COVID-19 virus," BOJ said, forecasting growth in the range of 4.0 to 8.0 percent in the 2021/22 year, as in February, with the highest estimate based on a strong recovery in tourism.

Angola holds key rate but raises liquidity absorption rate

     Angola's central bank left its benchmark interest rate steady but raised the rate on its permanent liquidity absorption facility, saying there are persistent inflationary pressures in the economy despite a stable exchange rate and contained aggregate demand. 
     The Bank of Angola (BNA), one of the few central banks to have maintained interest rates last year as the COVID-19 pandemic swept the world, left its basic interest rate BNA at 15.50 percent, unchanged since it was lowered in May 2019.
     But the central bank's monetary policy committee, which in January said there was an "evident" need for a more restrictive policy this year to reach its target of single digit inflation next year, raised the liquidity absorption rate 500 basis points to 12.0 percent.

     Angola's inflation rate accelerated steadily last year and rose to 24.85 percent in February from 24.41 percent in January, mainly due to a greater rise in the cost of food and non-alcoholic beverages.

     "CPM (monetary policy committee) found that inflationary pressures persist in the national economy in the short term despite the stability observed in the foreign exchange market and in the behavior of liquidity, as well as the existence of contained aggregate demand," BNA said.

     The monetary base in kwanza, one of the operational variables of monetary policy, grew 12.75 percent in the first two months of 2021 and 18 percent in the last 12 months while the bank's stock of gross international reserves dipped 0.7 percent to US$15.29 billion in February from January for import cover of 12.3 months.

     After falling 26 percent in 2020, the exchange rate of the kwanza has firmed this year and was trading at 626.1 to the U.S. dollar today, up 4.5 percent this year.

     The economy of Angola, Africa's second largest oil producer, was hit hard by the plunge in oil prices last year and one of the aims of President Joao Lourenco, who took over in 2017 after 38 years of rule by Jose Eduardo dos Santos, is to diversify away from oil in addition to opening up the country to foreign investment and tackling corruption.

     In the third quarter of last year Angola's economy shrank an annual 5.8 percent, down from an 8.3 percent decline in the second quarter.

    www.CentralBankNews.info