"Global outlier Angola has room to cut rate as currency jumps"

" \n Global outlier Angola has room to cut rate as currency jumps \n \n\n \n Angola\u2019s central bank may consider cutting its benchmark rate as inflation slows and after its currency appreciated at the fastest pace in decades. \n \n\n \n The Banco Nacional de Angola kept its benchmark rate at 20% for a sixth straight meeting in July, aided by the kwanza\u2019s 22% gain against the dollar this year that makes it the world\u2019s second-best performing currency tracked by Bloomberg. The central bank forecasts inflation will slow to below 18% by year-end from 21.4% in July. \n \n\n \n With price-gains slowing \u201cwe expect interest rates to follow the same trend,\u201d Governor Jose de Lima Massano, 53, said in an interview with Bloomberg TV on Tuesday. Massano wants to boost foreign-exchange reserves to cover 10 months of imports from eight months, he said. \n \n\n \n Cutting borrowing costs will make Angola, Africa\u2019s second-largest oil producer, a global outlier as price-gains accelerate in many countries across the world. UK inflation is on track to surge above 18% for the first time in almost half a century next year, while Indonesia on Tuesday unexpectedly raised borrowing costs for the first time since 2018. \n \n\n \n The Angolan central bank\u2019s monetary policy committee next meets on September 26. The yield on the nation\u2019s eurobonds maturing in 2032 fell 34 basis points at 2:09 p.m. in Luanda. The premium investors demand over US Treasuries to hold Angola\u2019s debt currently stands at 857 basis points, according to JPMorgan Chase & Co. indexes. \n \n\n \n Massano said Angola\u2019s inflation may slow to less than 10% by the second half of next year, earlier than the central bank\u2019s previous prediction of 2024. This will give the central bank more room to stimulate the economy, which is expected to expand 3% this year, according to Massano. \n \n\n \n President Joao Lourenco, who heads the Popular Movement for the Liberation of Angola, or MPLA, is seeking re-election. He\u2019s facing tough opposition from Adalberto Costa Junior, head of the National Union for the Total Liberation of Angola, or Unita. \n \n\n \n A big challenge for the new president will be to tackle a debt burden. \n \n\n \n While Fitch Ratings Inc. predicts Angola\u2019s public liabilities will fall to 56.5% of gross domestic product in 2022, from 123.8% in 2020, its overseas debt amortisation in the three years to 2025 will cost about $5.5 billion a year. That\u2019s because Lourenco\u2019s government has re-profiled bilateral debt owed to Chinese official lenders, according to Fitch. The southwest African country owes about $19 billion to China. \n \n\n \n This is the second time Massano is at the helm of Angola\u2019s central bank. \n \n\n \n During his current tenure, which began in 2017, the UK-educated Massano has been credited with stabilising the exchange rate by allowing the local currency to float freely, slowing inflation and improving the reputation of Angola\u2019s financial sector after a series of reforms with the International Monetary Fund. \n \n\n \n Massano\u2019s first stint as central bank governor during 2010-2015 was more difficult. At the time, Angola was facing a soaring deficit following a collapse in oil prices. When Massano left five years later, Angola\u2019s foreign exchange reserves were at a record high and inflation rate was at the lowest level in the nation\u2019s history. \n \n\n \n \u201cIt\u2019s like I have a vacation,\u201d Massano said, in a separate interview in his office inside the central bank\u2019s pink-colored building. \n \n\n \n The central banker, who enjoys jogging on weekends to \u201cclear his mind,\u201d declined to comment on whether he would be available to serve a third term as governor of the Banco Nacional de Angola. \n \n\n \n \u201cWe\u2019re focused on doing our jobs and fulfilling our mandate,\u201d said Massano. \u201cWe don\u2019t do miracles.\u201d \n "

"Global outlier Angola has room to cut rate as currency jumps"

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