Angola cut its key interest rate on Tuesday as inflation continued to fall, signalling a further shift toward looser monetary conditions.
The National Bank of Angola (BNA) reduced its benchmark rate to 18.5% from 19.0%, trimmed the overnight lending rate to 19.5% and lowered the overnight absorption rate to 16.5%, following a two-day Monetary Policy Committee meeting.
It marks the second rate cut this year and the lowest policy level since late 2023.
The move comes as inflation extends its retreat. Annual consumer prices fell to 17.43% in October from 18.16% in September, the lowest since October 2023, according to the National Institute of Statistics.
Monthly inflation also eased to 0.93%, with food costs contributing 0.64 percentage points. The moderation followed a sharp July peak of 31.09%, after which a broader slowdown took hold in August.
“The reduction of the policy interest rates is justified, on one hand, by the favourable evolution of the main macroeconomic indicators, notably the consistent slowdown in inflation and, on the other hand, by an assessment of monetary indicators that signal lower inflationary pressures in the short term,” the bank said.
Inflation eases, but economic fragility persists
The BNA expects inflation to keep easing into next month, supported by adequate liquidity, greater availability of widely consumed goods and relative exchange rate stability. The bank projects inflation to average 17.0% this year, then drop to 13.5% in 2026.
Still, structural challenges cloud the outlook. The country’s goods account surplus halved in October, plunging from $1.01 billion to $539 million. Exports have fallen 17.03% so far this year, while imports have climbed 13.50%.
The central bank said reserves remain strong at $15.31 billion, offering 7.87 months of import cover. The kwanza has stabilised after significant depreciation in 2023 and early 2024.
The International Monetary Fund last month cut Angola’s 2025 growth outlook to 2.1%, citing weaker oil exports and heightened debt risks.
“Angola’s capacity to repay is assessed as adequate but subject to risks, and risks have increased since last year,” the IMF warned. “In an adverse scenario… repayment indicators would weaken.”
