Angola central bank hikes rates as inflation continues to climb

LUANDA (Reuters) -Angola’s central bank increased its main interest rate from 17% to 18% on Tuesday, aiming to curb rising inflation which it hopes to get back into single digits in the medium term.

Inflation climbed to 16.58% year-on-year in October from 15.01% in September.

It had slowed significantly last year and over the first half of 2023, before being spurred by a steep depreciation of the kwanza currency over May-June when the kwanza dropped by more than one-third against the U.S. dollar.

Bank of Angola Governor Manuel Tiago Dias told a news conference that the bank now saw inflation ending the year above 19%, versus an earlier target of 14%.

He said the kwanza had now mostly adjusted to a reduction in foreign-exchange supply.

During a visit last month, International Monetary Fund officials urged Angola to let the kwanza float, saying it worked like a shock-absorber for external events.

Tiago Dias insisted on Tuesday that the exchange rate was floating, even though the kwanza has stayed in a tight range around 830 to the dollar since early July.

(Reporting by Miguel Gomes; Writing by Bhargav Acharya; Editing by Alexander Winning)