Angola’s central bank has kept its benchmark interest rate at 17.5%, pausing a months-long easing cycle as policymakers balance slowing inflation with rising global economic uncertainties.
The decision followed the second Monetary Policy Committee (MPC) meeting of the year at the National Bank of Angola (BNA), which opted to maintain a cautious stance despite improving domestic inflation data.
The benchmark BNA Rate remains at its lowest level since late 2023, after three consecutive cuts beginning in September last year reduced it from a peak of 19.5%, where it had stood since December 2022.
Alongside the rate decision, the central bank left the Permanent Liquidity Provision Facility unchanged at 18.5% and the Permanent Liquidity Absorption Facility at 16.5%.
However, policymakers eased liquidity conditions slightly by lowering the required reserve ratio on kwanza deposits to 17.5% from 18%, a move aimed at improving funding conditions within the banking system.
The BNA said maintaining the benchmark rate “reflects the need to maintain a prudent stance in a context still marked by uncertainties in the international economic environment, associated with the worsening of geopolitical conflicts with potential impacts on the national economy.”
It added that the reduction in reserve requirements “aims to free up liquidity to stimulate the interbank money market.”
Inflation slows as oil risks linger
The decision comes as inflation in Africa’s second-largest oil exporter continues to moderate.
Consumer prices declined for the 19th consecutive month, with annual inflation slowing to 13.35% in February from 14.56% in January, according to data from Angola’s National Institute of Statistics (INE).
The February reading marks the lowest inflation level since July 2023, when it stood at 12.12%.
On a month-to-month basis, prices increased 0.52%, down from 0.68% in January, indicating easing pressure across the economy.
Food prices remained the main contributor to inflation, with food and non-alcoholic beverages accounting for 61.69% of the overall increase and contributing 0.34 percentage points, according to INE data.
The central bank noted that the decline in inflation during February “was observed in all provinces.”
Despite the steady improvement in price stability, policymakers warned that external developments could still derail the disinflation trend.
The BNA said geopolitical tensions — particularly the ongoing US-Iran war — pose risks to the global oil market that could filter through to domestic prices.
Oil prices have climbed well above $80 a barrel and have fluctuated sharply in recent days amid the conflict.
For Angola, which relies heavily on crude exports, such swings carry significant implications. Oil accounts for more than two-thirds of the country’s foreign exchange earnings, making the economy highly sensitive to global energy markets.
The country has also been grappling with declining oil production, even after withdrawing from the OPEC oil cartel in late 2023 in an effort to regain greater control over its output policy.
Meanwhile, the central bank reported continued expansion in domestic lending.
Credit to the economy denominated in kwanzas rose to 7.23 trillion in February, representing a 0.37% increase from the previous month and an 18.56% year-on-year rise.
External accounts, however, have shown signs of softening compared with last year.
Angola recorded a trade surplus of $2.45 billion during the first two months of the year, down from $2.83 billion in the same period of 2025, mainly due to declining export revenues.
International reserves stood at $15.93 billion, equivalent to 7.4 months of import cover for goods and services, according to the central bank.
Looking ahead, the BNA expects the economy to expand 3.5% this year, slightly higher than the 3.13% growth recorded last year.
The outlook is largely supported by the non-oil sector, which is projected to grow 4.5%, reflecting broader diversification efforts.
The oil sector, which contracted 1.21% in the fourth quarter of last year, is expected to return to modest growth of 1.1% this year, the central bank said.
For policymakers, the challenge now lies in balancing monetary easing with the risks posed by volatile oil markets and global geopolitical tensions, factors that continue to shape Angola’s economic outlook.
