Luanda - The Monetary Policy Committee of the National Reserve Bank of Angola (BNA) decided Friday to reduce the basic interest rate from 19.5 percent to 18 percent, after analysing the macroeconomic indicators of recent times.
The BNA also changed the interest rate on the permanent liquidity decency facility from 21% to 18% and the interest rate on the permanent liquidity absorption facility from 15% to 14%.
The decision, according to the Governor of the BNA, José de Lima Massano, is based on the reduction of inflation observed over 2022 and a certain reduction of inflationary pressures.
The MPC has also analysed the national and international monetary economic context to take up the reduction steps.
Credit Facility
The decision taken to reduce all the leading rates of the BNA will allow firstly citizens and companies with national currency loans referenced to Luibor, the interbank market rate, to benefit from this relief.
The rates, in addition to the transactions that occur on a day-to-day basis are influenced by action of the BNA, based on its benchmarks, such as is the permanent liquidity decency facility interest rate, which is the rate that commercial banks resort to the Central Bank, when in need of liquidity.
"If this rate is lower, it means that banks will be able to use lower costs for their liquidity needs, and these lower costs can be passed on to their clients," the BNA Governor explained.
According to José de Lima Massano, the reduction is what is expected to be seen in this first period, having admitted that a strong credit growth, in the short term, is not expected; but credit will naturally continue to grow at a pace that for the purpose of reducing inflation, is not so out of place.
Massano added that currently one of the Central Bank's main concerns is the effectiveness of the instruments used to transmit Monetary Policy.
Having more favourable conditions, the BNA guarantees that families and companies with credit in local currency have lower rates, Mr Massano said, underlining that with lower interest rates it is also expected to see more projects become feasible as financial costs will tend to be lower.
With the increase in credit taking place, the BNA expects a positive impact from the pace of the economy and other existing assumptions, ruling out dangers that could affect the course of disinflation that the economy has been recording.
The reduction in interest rates will affect any new requests for credit that are made, the effects of which may be felt over the next 90 days.
