LUANDA, Sept 16 – Angola’s central bank has cut its key interest rate by 100 basis points to 14.75%, extending its monetary easing cycle as inflation falls to single digits for the first time in more than a decade.
The Bank of Angola lowered its policy rate from 15.75% on Tuesday, following a 125-basis-point reduction in July and a 50-basis-point cut in May.
The latest decision brings the cumulative reduction in the policy rate since May to 275 basis points, as price pressures continue to moderate in the southern African oil producer.
Annual inflation fell to 8.78% in August, from 9.33% in July, according to the latest figures. Inflation was last below 10% in Angola in 2015.
The return of inflation to single digits provides the central bank with greater scope to reduce borrowing costs while continuing to monitor price stability.
Angola’s latest rate decision also marks a notable shift from the tighter monetary conditions that had been maintained to contain inflation. The successive reductions suggest policymakers are increasingly responding to the sustained decline in consumer price pressures.
For businesses and investors, lower policy rates could gradually translate into reduced financing costs across the economy, although the transmission to lending rates will depend on conditions within Angola’s banking system.
The policy easing also comes as Angola seeks to support economic activity while maintaining macroeconomic stability in an economy heavily influenced by the performance of its oil sector.
