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Angola's central bank governor sees more room to cut interest rates

Colin McClelland

The Angolan central bank governor says there is room for lending rates to come down, but he wants to avoid unnecessary price pressures.

Angola. (Reuters)

Angola’s central bank has room to lower interest rates to spur investment as inflation eases in Africa’s second largest oil producer, Governor Jose de Lima Massano said.

Policy makers have kept the benchmark interest rate unchanged at 9.25% since lowering it by half a percentage point in November. Inflation slowed to 7.32% in March from 7.48% in the previous month.

“There is room for interest rates to come down but we want to make sure we’re not putting unnecessary pressure on prices,” Massano, 44, said in an interview on Tuesday in his office in the capital, Luanda. “Stable inflation creates conditions for more credit to the economy at lower costs.”

Angola is stabilising its economy to help spur investment and reduce its reliance on oil, which accounts for about 45% of gross domestic product and 80% of government tax revenue.

Banco Nacional de Angola has achieved this year’s inflation target of 7% to 9%, Massano said.

“If inflation keeps falling it’s expected that the central bank can decide to lower interest rates,” he said. “If we feel there’s room we’ll do it.”

The government expects the $122-billion economy, sub- Saharan Africa’s third largest after Nigeria and South Africa, to grow between 5% and 7% this year, boosted by a 9% expansion of non-oil industries, the governor said. – Bloomberg

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