Thursday, November 30, 2017

Angola raises rate 200 bps to reverse rise in inflation

      Angola's central bank raised its benchmark BNA rate by 200 basis points to 18 percent, saying it needed to take this measure to reverse the inflationary process given the high level of inflation.
       It is the first rate hike by the National Bank of Angola (BNA) since June 2016 and follows the appointment of a new central bank governor, Jose Massano, by the country's president in late October. Massano replaced Walter Filipe da Silva who had been governor since March 2015.
       After declining all year, Angola's national inflation rate rose to 26.25 percent in October from 25.18 percent in the previous two months.
       The monthly inflation rate in the province of Luana rose to 2.98 percent in October from 2.58 percent in September and 1.79 percent in October 2016 for an annual rate of 28.96 percent, with the largest increase coming from prices of health, miscellaneous goods and services, clothing and footwear, and alcoholic beverages and tobacco.
       In addition to the rate hike, the bank's monetary policy committee also took a series of other policy initiatives, including adopting the monetary base in domestic currency as an operational variable for monetary policy as strict monitoring of liquidity is fundamental to the stability of prices.
      While the central bank left its overnight liquidity facility at 20.0 percent, it reduced the permanent liquidity absorption facility to zero percent and will intervene with open market operations to regulated liquidity.
       It also made changes to banks' mandatory reserves, with the ratio for commercial banks' customer deposits in kwanza lowered to 21.0 percent from 30.0 percent.
       Excluded from this change are accounts held by the central and local governments, along with municipalities, with the ratio remaining unchanged.
       In addition, banks will be able to deduct 80 percent of any credit extended to agricultural, livestock, forestry and fishery projects in calculating their mandatory reserves.
       In October credit to the economy rose 0.14 percent while gross credit to the central government rose 1.84 percent, the BNA said.



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